Daily Archives: February 18, 2019

We’re Still Stuck in 2009 … Why?

Five years ago, the doctor wrote a post about how the doctor’s 2014 Procurement Prediction is Going to Come True and that 2014 was going to be 2009 Part VI and

  • the focus will continue to be on cost-cutting and not value-creation,
  • valuable, high-ROI, technology will continue to be ignored, and
  • the training and new talent budgets will remain empty.

And it was a sad state of affairs. And he’d hoped that, by now, things would have changed. But if you check the latest Deloitte Global CPO Survey, 78% of CPOS are still PRIMARILY FOCUSSED on Cost Reduction!

Unless they’re Procurement team has been totally incompetent for the last five year, that’s not going to happen. We’re about to return to Depression Era Economics. We’re heading for a downturn a result of a global slowdown in GDP growth. China can’t keep building empty cities. The US can’t continue to build (defence) debt and grow without an immigrant workforce that will do the jobs Americans don’t want. Goods can’t continue to get cheaper when labour costs are rising and materials are becoming scarce. Outsourcing is not going to get cheaper when transportation costs have to rise as energy (oil) costs rise. And so on.

Also, the study found that, even in 2018, only one third of Procurement Leaders use modern technologies such as predictive analytics and collaboration networks.

And over half of Procurement Leaders believe that their current teams do not have sufficient levels of skills and capabilities to deliver on their procurement strategy … proving that they have, as expected, not been investing in training like they should have been.

Eleven years ago, Hackett published a vision of Procurement in 2020 where it predicted that, through a year-over-year evolutionary strategy, it would reach the point where it was harnessing the power of supply markets to maximize the value it is getting from its spend, enabling business strategy, and optimizing its tactical execution. But, in an average organization, Procurement is, at least for now, still overspending, still divorced from business strategy, and unable to react to unexpected disruptions or opportunities in the supply chain.

And it looks like 2020 is, not as everyone predicted in the noughts, going to be 2009 Part XI. Who will take the lead and change it?