An interview with the Senior Research Director at The Hackett Group, Jimmy LeFever.
Welcome to Zycus Procurement Experts Outlook 2019. In this interview, we have Senior Research Director, Procurement Advisory Practice at The Hackett Group, Jimmy LeFever.
Zycus: What is the most prominent trend visible in 2019?
Jimmy LeFever: Digital transformation is the ruling trend which Procurement has to continue focusing on to develop strategic roadmaps. While some organizations have significantly outperformed others, some organizations have are fast gearing up for digital transformation.
Zycus: As you mentioned, digital transformation does give an organization an edge over others. What is it that best-in-class organizations do differently to stay ahead of the curve?
Jimmy: Best-in-class organisations have a focus on talent and skills. They are rethinking their approach to attract talent, invest in development, and plan better retention strategies. Some organizations are even beginning to create new roles, e.g., procurement-specific data scientists and digital specialists. Many organizations have implemented advanced data, analytics, and visualization tools. The focus on digital skills is as strong as the focus on storytelling and explaining complex concepts helping businesses find the right market solution.
Zycus: Do you mean that along with attracting the right talent pool, organizations should also focus on talent retention to benefit in the long run?
Jimmy LeFever: Absolutely! I can see more and more companies focusing on stakeholder experience. This means Procurement is going beyond delivering primary responsibilities to the stakeholder and moving towards improving the stakeholder experience via streamlined processes and promoting the wellbeing of the business.
Zycus: Most people consider procurement, tactical and technical. But when you talk about stakeholder experience, it is beyond technology and strategy. Do you think Procurement requires rebranding?
Jimmy LeFever: The brand perception that Procurement has is myopic around savings and savings alone. Such knowledge holds people back from seeing the strategic impact procurement can have in the organization’s overall objective. The function can play a massive part in making the organization more agile during times of unpredictable changes. However, to change this perception of a rigid, slow, and tactical function, Procurement needs to take a few steps in the direction of rebranding itself.
Zycus: Procurement’s scope of work is changing and expanding, but the image transition hasn’t been proportional to this. What are some things Procurement can do to rebrand or reinvent its image in an organization?
Jimmy LeFever: First and foremost, organizations should strive to build a strong brand identity, brand value, and brand goal. Then, all the teams should work in sync to deliver the goal. For example, many organizations are moving towards more sustainable ways of doing business. As supply-chain and procurement professionals, we can provide that brand value by adopting a sustainable procurement model. Such a change in behavior will significantly impact both the global economy as well as the environment.
Zycus: Since we are talking about sustainability, what suggestions do you have for procurement teams when they look into the market for a source-to-pay provider?
Jimmy LeFever: My suggestion will be that they should select a vendor who can make a difference by employing rigorous standards. They should look out for providers who can assess the way they operate and do business, and affect their local communities and the environment. Many organizations are also looking to grow their supplier diversity programs to be more inclusive of underrepresented groups within their supply base.
A provider with stringent practices and standards will be impactful when measured consistently. Benchmarking is another way, a systematic method of regular monitoring to discover best practices and improve continuously. As you’re probably aware, The Hackett Group is the leader when it comes to process and technology benchmarking. For Procurement, it is to critical benchmark and measure to identify problem areas, weak links, and modification and debugging of the current strategy.
Zycus: What are procurement benchmark metrics that a procurement leader should track to measure his team’s performance effectively?
Jimmy LeFever: The two primary measurements that have long been at the forefront are the cost of Procurement and the cost savings that Procurement can achieve. For procurement leaders, those should continue as great metrics.
Zycus: We often see Procurement Leaders focused on just savings as a holistic parameter to measure performance effectively. Do you think the result garnered would be the complete picture? What other things can we consider?
Jimmy LeFever: Yes, organizations overlook two other metrics. I have already discussed stakeholder experience, and the second one is ROI. ROI is an excellent performance measure because it looks at cost and cost savings holistically. Stakeholder experience is a little tricky because it isn’t easily quantifiable. What can drive value for the business is to acknowledge Procurement’s role aligned with business objectives. Focusing on cost savings alone will rarely line up to meet the broader goal.
Zycus: As we conclude, what are the three things procurement leaders should start/stop doing in 2019 to achieve the goals you have informed us?
Jimmy LeFever: First, stop pushing out information that nobody cares. Second, stop focusing on just savings and widen your scope. Third, for an organization to value Procurement’s efforts, staff should be aligned with the business objectives.
From this interview, we can conclude that if Procurement has any directive this year, it is to widen its horizon! And to do so, organizations need to-
- Move from tactical to strategic, which is more value-based
- Align goals with their brand value
- Adopt sustainable Procurement
Following these three will not only rebrand Procurement’s image as a strategic partner but will also increase its impact and value within the organization.
Read our latest eBook “Procurement Experts Outlook 2019” to gain more insights into what eight other experts predict for the procurement future.