Ensuring supply continuity and combatting inflationary price increases are the Top 2 priorities for procurement organizations in 2023, while talent management has jumped to the top of procurement’s list of planned improvement initiatives, according to new CPO Agenda research from The Hackett Group, Inc. But strategic priorities are driving procurement’s continued focus on reducing spend cost, and pursuing digital transformation remain critical, along with improving analytics and insight capabilities.
“We’ve seen a reordering of priorities in terms of procurement strategy for 2023,” says The Hackett Group senior research director, procurement and procure-to-pay advisory, Amy Hillcox. “Ensuring supply continuity -- the top priority -- is even more of a focus than it was two years ago at the outset of the pandemic, in part because of geopolitical turmoil and other disruptions. Combatting inflationary pressures has soared to the No. 2 spot, which is to be expected.”
“The biggest surprise for 2023 is that talent management isn’t in the Top 10, which it has been for several years. Talent should be a foundational element for many of the things that procurement leaders are trying to accomplish. But for 2023, it’s fallen off the Top 10 list, in part due to the current and difficult economic environment, as well as the perception that it’s a fairly mature capability. Even with that, the number of organizations with talent management improvement initiatives planned in 2023 exceed the number focused on all other areas,” says Chris Sawchuk, principal and global procurement advisory practice leader of th Hackett Group.
- Talent management is the No. 1 planned improvement initiative for procurement organizations in 2023. But it was absent from procurement’s list of top priorities for 2023, in part because executives view talent management as a relatively mature capability.
- An expected 10.6% increase in workload, combined with smaller increases in procurement staffing and budgets, will drive a productivity gap of 7.4% and an efficiency gap of 7.8%. An increase in technology spend of 5.7% indicates a growing reliance on technology to increase procurement productivity, efficiency and effectiveness.
- Nearly one-half of all companies surveyed have large-scale deployments of spend analytics tools in place, and another 44% have pilots. Spend analytics is also among the technology areas with the highest growth rates for 2023, the research found.
“Reducing spend cost not only remains a core priority for procurement, but [also] will be elevated further in 2023 as procurement organizations aggressively pursue opportunities to claw back cost increases that have occurred in the last couple of years,” says Sawchuk. “But more and more, procurement organizations will also be looking to augment their cost savings initiatives to create broader value and true competitive advantage for their companies. To do this, procurement organizations must build effective capabilities for continuous data acquisition and advanced analytics to provide both predictive and prescriptive insight and intelligence.”