Procurement in 2019: Lean and IT-enabled

Digital procurement trends for 2019

In an April post, The Hackett Group posted a report on procurement discipline in 2019. The organization noted the field has “critical development priorities” to address this year. Furthermore, the report’s overarching theme is companies can “do more with less” because of recent digital innovations.

Info Technology Meets Ops Technology

The Hackett Group found increased efficiency in the procurement discipline thanks to the continuing confluence of information technologies with operational technologies—also known as IT/OT convergence.

One of the report’s most salient points is that 30-40 percent of large procurement organizations said digital transformation has “a high impact in achieving enterprise objectives.”

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Over the next two to three years, Hackett’s report predicts organizations will experience dramatic growth in areas like robotic automation and advanced analytics. The firm forecasts adoption growth rates for those technologies at 200 and 60 percent, respectively.

“Do More with Less”

Hackett also notes that despite the adoption of new technologies, the procurement sector will need “to do more with less.”

In 2018, industry organizations saw budget growth of around 2.7 percent. For 2019, they should expect less than half of that budget growth at 1.3 percent.

The research agency also noted procurement staffing growth is also trending downward, falling to 0.9 percent in 2019 from 2.8 percent in 2018.

The results seem more paradoxical from there. Despite more than halving budget growth and procurement staffing, procurement organizations should anticipate revenue growth to rise to 5.7 percent this year, a 0.7 increase from last year.

Another procurement sector trend identified by the Hackett group is an increased focus on seeking agile practices and strategic sourcing to weather economic downturns.

Fulfilling Expectations

Helpfully, The Hackett Group’s report outlined the ways procurement companies can address declining budgets and staffing and meet financial expectations. Laura Gibbons, the firm’s research director explained what operational changes need to be made.

“Agility is critical if procurement is to be able to respond to market changes. Without a focus on customer-centricity, procurement can miss significant opportunities for improving efficiency, simply because they don’t effectively know what the business needs.”

From a technical perspective, the report stressed the need for industry organizations to develop their analytical capabilities. In a statement that will surprise no one, the firm also recommended procurement organizations prioritize modernizing their application platforms. The group notes that doing so will simplify processes by consolidating multiple legacy systems.

Lastly, the comprehensive report outlined forward-looking ways the procurement field can address the need to keep current on the latest technical innovationsArtificial intelligence, automation, and smart factories were concepts mentioned as over the horizon goals for many procurement organizations.