In January 2003, CASME held its first ever RoundTable, marking the beginning of a truly global procurement community that exists today. Gathered around a hotel meeting room in Winchester, UK, a small group of procurement professionals discussed the issues of sourcing and purchasing indirect categories, to find that they shared similar challenges and faced the same credibility issues within their respective businesses.
Fast forward 20 years, and Procurement has changed beyond recognition to become an increasingly influential business function. In CASME’s anniversary year of supporting Procurement globally, we look back on how the function has evolved, and its remarkable growth in importance.
Indirect Procurement is being taken much more seriously than it was in 2003. As Jonathan Lyles, CASME’s founder and CEO recalls, Procurement has had a tough fight to become a valued business partner: “Much of the conversation at the Winchester RoundTable 20-years ago was about how Procurement was typically only brought into discussions for cost negotiations.”
Consider Marketing, well-documented as one of the categories where there was often an adversarial relationship between Procurement, the marketing teams, and the various agencies. Through conversations during regular CASME RoundTables, our members shared their strategies for meeting with stakeholders, invested time in learning and understanding the marketing category, and listened to expert advice from CASME’s category facilitators, such as Tina Fegent, renowned for her marketing procurement expertise.
“The CASME RoundTables have really provided an excellent environment for marketing procurement teams to share and learn from each other, with agendas that reflect the fast-moving and complex nature of buying marketing services,” explains Tina.
“It’s true for other categories as well,” continues Jonathan, “We frequently hear feedback that the peer-to-peer sharing at CASME events is one of the most valued elements of membership.”
Thankfully, both business trust and transparency have grown, and Procurement is now considered to be much more of an equal strategic partner with its business partners and internal stakeholders; although there is always an ongoing dialogue and relationship that needs attention.
Over the years, the depth of Procurement’s responsibilities and the breadth of categories being managed have expanded significantly, for example, the increasing requirement for professional services procurement and increased scope of IT sourcing.
Procurement’s focus has also shifted from being tactical and transactional, towards strategic sourcing and value generation; with the focus of the CASME procurement community now being to provide value beyond savings, as shown in the chart below. This evolution has enabled Procurement to make a real difference in leading strategic initiatives within organisations, as well as delivering the important day-to-day efficiencies.
With all this extra responsibility, many procurement teams have needed to introduce a structured approach, such as a 7-step process, to ensure efficient and effective procurement activities. Each step serves a specific purpose and contributes to the overall objective of obtaining goods or services in a cost-effective and timely manner while minimising risks and ensuring compliance. It is worth noting that while a 7-step process is commonly used, some organisations might have variations or additional steps based on their specific needs and industry requirements.
Supporting corporate responsibility and managing risk
As the function responsible for third parties, Procurement has taken greater ownership of ethical and corporate responsibility obligations. CASME first facilitated a Corporate Responsibility RoundTable back in 2008. Since then, CSR has morphed into Sustainability, and more recently into Environment, Social and Governance, incorporating a much broader scope and responsibility.
Procurement plays a pivotal role of identifying and monitoring third-party risk and solving supply problems. The extent of an organisation’s actions and reactions to risk is determined by several factors, and the differences between companies can be significant. Nevertheless, supplier monitoring of some form is necessary to avoid potential pitfalls. Taking a holistic approach to risk management is key, with personnel, technology and tools for interpreting and acting on risk intelligence
Increase in Outsourcing
The shift to a digital, connected economy led to a rapid increase in offshoring and outsourcing across back-office functions such as finance, HR, IT and marketing production. Procurement has played a crucial role in managing and optimising these outsourcing relationships, ensuring cost-effectiveness and quality outcomes.
Centres of Excellence
As Procurement gained prominence, organisations recognised the need for specialised support to elevate their procurement practices. This trend has given rise to centralised Centre of Excellence (CoE) organisations that support the procurement function.
Digitalisation has enabled a larger focus on spend analytics and risk management, helping Procurement CoEs become more data-driven and strategic. However, several benchmarking studies within the CASME membership community have identified that challenges still exist, such as the lack of integrated data and systems in many organisations, hindering the centralisation and recording of CoE activities.
As technology continues to transform every sector of society, the digitalisation of the procurement function has become essential for businesses to increase process efficiencies and remain competitive. However, digital transformation is not easy, and companies are at different stages in the process. While the adoption of digital transformation varies among companies, it has proven to be immensely beneficial - gone are the days of telephoning suppliers to establish the annual spend!
According to a CASME benchmarking poll, spend analytics (89%) and improved tactical and operational processes (68%) were deemed to be the most beneficial areas for using digital and automated technological solutions. The explosive rise of artificial intelligence (AI) also promises to play a larger role in procurement tasks, although it is unlikely to replace human activities entirely.
A new world needs new skills
As technology continues to reshape the procurement landscape, the procurement professional of the future will require a diverse skill set. As indicated by Rob Halsall, in CASME podcast episodes, ‘the critical aspects of successful procurement will focus on understanding business needs, effective communication and the ability to develop strong supplier/stakeholder relationships. Rob explains that while machines and automation can handle straightforward tasks, the unique human touch will remain essential in managing complex procurement challenges and developing trust.
Listen to The Neuroscience of Procurement podcast here.
Embracing the future
In conclusion, the evolution of procurement over the past two decades has been nothing short of remarkable. From an underappreciated cost centre to an influential strategic partner, Procurement has adapted to the changing business landscape and embraced technological advancements. As we look ahead to the future, the continued development of skills, collaboration, and digitalisation will play pivotal roles in ensuring Procurement remains a driving force for businesses worldwide.
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