Procurement has changed: These are the capabilities you need to evolve alongside it

In the world of procurement, the only constant is change. However, over the last five years, organizations have faced more change than usual.

Amongst a global pandemic, widespread geopolitical instability and an international shipping shortage, disruption has quickly evolved from the exception to the rule. Amid the disruption, leading procurement teams have demonstrated an immense capability to help businesses weather the storm – picking up a whole host of new responsibilities in the process.

From mitigating enterprise risk to enabling organizations to make more sustainable sourcing decisions and to comply with complex regulations, today’s procurement leaders have a lot on their plate. If they want to rise to those new expectations and become proactive drivers of growth and value, they need to develop some new key capabilities.

What the modern procurement function needs to succeed
In the last few years, we’ve seen disruption quickly shift from the exception to the norm. Procurement’s success in this rapidly evolving environment requires three key capabilities: awareness, an innovation mindset and agility.

Given the pace of change today, all practitioners need to stay on top of the latest information, trends and activities in the marketplace. Intelligence and analytics have a very important role to play in that.

Next, practitioners must be able to apply these insights in the best way for their company, which requires them to think in terms of the art of the possible. Especially today, novel situations require novel approaches, making innovative thinking a critical skill set.

Finally, agility and nimbleness are essential. When markets and conditions shift, procurement practitioners must be able to respond immediately and pivot their strategies in real-time. That means not just thinking about what is happening in the market, but what could happen by using proactive scenario planning and simulations to prepare for multiple possible outcomes.

Procurement’s new intelligence opportunity
All three of those capabilities — awareness, an innovation mindset and agility — depend on the same thing. If you want to stay aware of market developments, translate them into timely opportunities and adapt quickly, you need access to reliable procurement insights. To gain those insights, procurement teams need a clear and coherent view across an immense variety of data types.

Actionable and valuable procurement intelligence should bring together:

Category and market intelligence that gives a clear view of what’s happening externally today.
Traditional internal procurement data from POs, invoices and contracts data.
Business-specific context relating to the goals the organization is trying to achieve, its facilities and the resources it has available.
Operational KPI data which gives insight into factors such as how the business is working with its suppliers.
Forecasts of future category trends, commodity prices, and market insights to help the business to remain proactive and agile.

AI can help, but you still need to put people first
That’s where emerging technologies like AI become extremely useful. It’s simply not possible for procurement practitioners to manually sift through those immense volumes of data to make decisions. Instead, we must apply AI to do that sifting and translate vast amounts of raw data into more digestible insights that humans can use to make informed decisions.

AI can handle the massive ingestion and analysis workloads required to turn diverse data sources into actionable insights at speed. But to have the right impact, procurement leaders that apply AI in their function must ensure that it’s done in a way that augments and empowers their people.

Human knowledge and contextual awareness are still crucial for procurement decision-making. So, AI should be applied in ways that make it as quick and easy as possible for experts to use that knowledge and make value-creating decisions. This kind of human-centric and user-friendly application of AI will define the procurement function of tomorrow.

Whatever the future holds, reliable intelligence can help procurement teams navigate it
We’ve seen a huge amount of change over the last few years. Perhaps the most important trend of all is that the pace of change doesn’t seem to be slowing down. Disruption is now the default and procurement leaders and their teams need to develop the resilience, awareness and insight to pre-empt and adapt to whatever comes next.

Equipped with reliable, contextualized insights that are delivered in human-friendly ways, procurement practitioners can become highly responsive to market, category and geopolitical change. This in turn helps them create value and drive growth in even the most challenging conditions.

It’s a new way of working for the procurement function. It’s what the modern business needs, and it all starts with the right insights and intelligence.