Procurement officers have typically been focused on two things: ensuring the delivery of goods and services while keeping costs as low as possible. While these responsibilities will certainly not be fading any time soon, there will be a call for these same procurement professionals to fill other roles within the company. Procurement officers will soon need to be adaptable professionals with a whole new set of skills in their toolbox. These are some of the skills that will be most valuable to procurement officers in the next ten to fifteen years.
1. Holistically Manage Risk
While procurement officers are already heavily involved in predicting, managing, and mitigating risk, the approach to procurement risk management will begin to shift soon. Procurement officers will need to place less of an emphasis on compliance (though never neglect it), and more of an emphasis on managing total risk exposure, risk mitigation investments, and risk transfer pricing. Risk management will need to expand throughout the company, perhaps through governance structures which ensure that every department is completely on board. Contracts throughout the company will need to be reexamined and redrafted in order to reduce the overall exposure to risk. A procurement officer’s view of risk must become all–inclusive.
2. Enhance Sustainability
Where once procurement was focused primarily on simply managing cost, procurement officers will soon need to create sustainable supply chains. These supply chains must involve stable suppliers who can provide steady business. Industry Week suggests that procurement officials will need to move their companies from a “’linear economy’ of consumption and disposition” to a “’circular economy’ based on continuous use and reuse.” This transition will enhance the business relationships between companies, promote growth for the overall corporate entity, and bring a sustainable pattern of procurement that can be carried into the future.
3. Improve Supplier Relationships
An integral part of establishing a sustainable supply chain is improving the relationship that a company has with it suppliers. Procurement officers are already engaged in establishing and maintaining supplier relations, but the need for improving and maintaining excellent relationships with suppliers for extended amounts of time is becoming a more significant skill. It is important that procurement officials locate a trustworthy supplier and continue to work with that supplier, because it increases the chances of good deals for good quality, and it decreases supply chain risk.
4. Participate in a Global Market
New, innovative companies are rising up all over the world. An effective procurement officer will not only keep their eyes open for rising companies on a global scale, they will also learn the best method for dealing with international suppliers. They will work effectively to localize and use third-party entities that speak the correct language and understand the culture when dealing with international companies. Some of the places which procurement officers will wish to look include China, Brazil Russia, India, and other developing countries.
5. Involve New Technology
With so many companies transitioning to paperless offices, procurement officials need to have updated technology in order to perform their job effectively. Such technology will include risk management software, contract lifecycle management software, spend analytics, report generators, and many others. Becoming familiar with this technology will streamline the procurement process, improve collaboration between departments and other companies, and result in more efficient and effective procurement strategies.
6. Develop Financial Skills
Working as a procurement officer will demand a versatile skill set, which includes an ability to handle finances appropriately. The link between the finance department and the procurement department will need to be stronger than ever, and procurement officers will need to have a firm grasp of the finance principles that govern their company. The procurement process will likely become more and more rapid, meaning that procurement officials will need to be able to do their work without the luxury of consulting finance on every deal. This necessitates at least a basic understanding and application of the company’s governing financial principles and trajectory.
7. Lead-Out in Innovation
While procurement officers will not be called upon to develop new technology, they should be aware of the developments in engineering, design, and new product development. They will want to be aware of what the best product on the market is, and they will want to develop innovative ways to reduce cost and maximize efficiency. Understanding which new technology will be of most use to the company, and then procuring that technology, will help the procurement officer’s own company to develop new innovations and compete in the market today.
8. Collaborate Effectively
Both external collaboration and internal collaboration will become increasingly important in future years. These collaborative efforts will be crucial for procurement officers who wish to understand the necessary goods for their own company, what goods and service are the best, how to effectively manage their time and contracts, and how to properly outsource certain key functions of a company. The synergy created by inter-departmental communication will increase output, sales, revenue, and overall company efficiency.
9. Increase Transparency
Procurement officials will also need to be savvy in the realm of public relations. Because of social media and transparency laws, including Sarbanes-Oxley laws governing internal control, procurement practices will need to be easily accessible, traceable, and explainable. Utilizing contract management technology, salesforce software, procurement software, and other paperless solutions will increase transparency for the company by making records easily available and traceable. Procurement officers will need to be able to effectively navigate discussions with consumers, regulators, and the press in addition to their current suppliers.
10. Analyze Key Performance Indicators (KPIs)
Once information has been gathered, whether from internal sources or from external sources, procurement officials must improve their ability to handle and analyze KPIs. KPIs indicate the level of performance of a company (whether that is the procurement official’s own company, or a supplier that the official is researching). If the procurement official is researching an external entity, then the KPIs will be an important indicator for risk. If the company has a poor record of reaching their goals, or is unable to meet standard KPI, then that company may pose a greater risk. Understanding KPIs is already an important skill for procurement officials, and we mention it here simply so that it does not leave the forefront of anyone’s mind. It will continue to be an important method for improving risk management in the future, and every procurement official should be adept at analyzing KPIs.