Procurement Key Issues 2020 – How Has the Pandemic Changed Procurement Priorities?
Laura Gibbons, The Hackett Group’s senior director, interviews Chris Sawchuk, The Hackett Group’s principal, on the results of our 2020 Procurement Key Issues survey. They discuss how the pandemic has caused procurement priorities to shift in areas such as digital transformation, risk management, talent and skills, social responsibility, and more.
Today’s episode of the “Business Excelleration Podcast” is hosted by Laura Gibbons, senior research director for Procurement Executive Advisory. Laura welcomes Chris Sawchuk, principal and practice leader of Global Procurement Advisory at The Hackett Group, to the podcast. Laura guides the conversation as they discuss procurement’s key issues and how they have changed during the pandemic. The pandemic has pushed the procurement function to accelerate digital transformation.
The episode begins with Laura asking Chris how the expectations of cost reduction and efficiency have changed since COVID hit. The reduction of spend has been a top priority for procurement for a number of years, however, the focus on the organizational cost was a bit of a surprise. There has been a digital transformation in many organizations, but the costs haven’t gone down, and companies need to begin seeing a greater return on the digital investments they’ve been making for years. COVID, Chris says, is a stress test of digital transformation. Organizations had good insight into their Tier 1 suppliers and the risks there, but visibility into Tier 2 suppliers was not as good.
The pandemic exposed some of the vulnerabilities organizations had when it comes to managing risk. Chris explains that many supply chains were designed based on managing cost. What we see now is a reprioritization of the organization of those supply chains with direct implications. The supply chain strategy has to change significantly in order to reduce risk. The new priority for the organization has become diversification to reduce the risk of all of their supply coming from one location. This can significantly increase cost, and Chris explains that companies should be weighing these factors as they make supplier decisions.
Next, Laura asks Chris to discuss how talent and skills priorities have changed during the pandemic and what our new normal may look like. The three biggest gaps between where procurement professionals are today and where they believe they need to be in the future are:
As procurement leaders look at this going forward, Chris stresses that companies need to help workers develop these skills. While many knowledge workers have been working from home during the pandemic, it has made collaboration and integration difficult. He believes the new normal will be a hybrid model where staff can work from home, but will also be able to come together for important work that needs in-person collaboration.
Supplier diversity and sustainable sourcing weren’t on the top of the priority lists for many organizations even last year, but now corporate responsibility is a top-level priority. Diversification within the supply base has become a board-level discussion. Chris believes that in the future supplier development will come to the forefront to help grow business around diversification and sustainability. Corporate social responsibility, Chris believes, will become its own division of organizations as we look toward the future of consumers making this a priority.
As the episode ends, Laura asks Chris if he has any predictions for what procurement issues will be top priority in 2021. He says cost will remain a key priority going forward, while corporate social responsibility and supply risk will be at the top of the list as well.
:58 – Laura introduces today’s topic and guest Chris Sawchuk.
1:27 – Laura asks Chris about how cost expectations have changed during the pandemic.
4:00 – Chris discusses the importance of digital tools during the pandemic.
7:40 – Laura asks Chris what tools are helpful for organizations looking to manage risks.
8:57 – Chris answers the question, “How has talent and skills changed in the pandemic?”
18:10 – Laura asks Chris about supplier diversity and sustainable sourcing.
24:31 – Chris predicts what procurement issues will be high priority in 2021.