10 questions on procurement leaders’ minds for 2019

Expert Insight

10 questions on procurement leaders’ minds for 2019

The Business Affairs Forum launched our first Implementation Collaborative in November. Implementation Collaboratives are a new service designed to provide both practical advice on “work in the moment” and professional networking opportunities for senior finance and administration leaders.

Nearly 60 procurement leaders from across the U.S. and Canada joined four webconferences to share their current initiatives—and corresponding challenges and successes. In case you missed these conversations or need a recap, we’ve highlighted the ten questions most frequently raised by Procurement Implementation Collaborative participants.

1. How can procurement more strategically partner with other campus units?

On many campuses, procurement is still perceived as a back-office function that processes requisitions and approves contracts. But procurement leaders want their teams to function as strategic sourcing partners for all academic and administrative units. Several procurement leaders described how they are actively working to reset campus users’ perception of procurement. They’re training teams to be more customer service-oriented, and some teams are hosting listening tours with faculty and other distributed buyers to educate them on procurement’s services. Procurement leaders are also thinking beyond traditional commodities to focus on sourcing more strategic contracts and partnerships.

2. Should we migrate to e-procurement, and what benefits will we get by moving to the Cloud?

Procurement leaders are working to automate routine processes to free staff time for more strategic work, including building relationships with distributed buyers and analyzing spend data. To support this goal, many Collaborative participants have implemented or are currently implementing e-procurement systems. When selecting an e-procurement system, leaders weigh whether to implement a procurement-specific solution (e.g., Jaggaer, Coupa) or the procurement module of their institutions’ ERPs (e.g., Oracle Cloud, Workday, SAP Ariba). Leaders also questioned how cloud-based solutions will impact both staff’s daily activities and institutional security risks.

Concerns about e-procurement systems don’t vanish post-implementation. Collaborative participants who previously implemented systems are now focused on making platform interfaces more intuitive for end-users and encouraging distributed buyers to use these systems. As one Collaborative participant shared,

“We don’t talk enough about the end users. If they don’t like the e-procurement system, it’s not worth it. We have to think about which tool has the greatest end user satisfaction.”

3. How can I most effectively manage contracts in a decentralized procurement environment, and what vendor solutions will help me do so?

While many Collaborative participants have successfully increased on-contract spend, procurement leaders still lack knowledge and oversight of all contracts across their institutions. Of course, procurement teams cannot strategically manage contracts to maximize cost savings without fully understanding what contracts the institution has entered into and when they expire. In response, leaders are exploring technology solutions like Jaggaer’s Total Contract Manager or Oracle Fusion Procurement Contracts.

4. What metrics should I track to monitor my team’s efficiency, cost savings, and customer satisfaction?

Across segments, Collaborative participants acknowledge that they need to be more metrics-oriented. Procurement leaders are working to track and evaluate more performance data, from spend to staff productivity and service levels. As part of this effort, several Collaborative participants are building unit dashboards, but they questioned which metrics are most impactful to track and share. (Helpful tip—use the suggested performance metrics and metrics filtering process from our study, Selecting Core Performance Metrics, as a starting place for unit performance dashboards.)

Staff skills gaps also pose challenges. While procurement leaders want to perform more advanced data analysis, they acknowledge that most procurement staff weren’t hired for data-intensive roles and lack needed data skills.

5. How will Amazon disrupt—or enhance—our procurement operations?

Procurement leaders agree that Amazon has reshaped the buying and selling landscape. To get ahead of rogue Amazon spend, many procurement leaders have introduced campus-wide Amazon Business accounts and have added Amazon as a punch-out vendor option on their e-marketplaces. But Collaborative participants wonder how else they can partner with Amazon, and a few leaders raised more innovative initiatives. One institution, for example, has outsourced central receiving to Amazon.

6. How are my peers balancing supplier diversity goals with other institutional priorities?

Many campuses are looking to expand supplier diversity. While doing business with underrepresented vendors is important to institutional mission, procurement leaders struggle to solicit competitive contracts from diverse suppliers—and to convince distributed campus purchasers to buy from these suppliers once contracts are secured. As one Collaborative participant explained,

“We’re a public institution with a public mandate. I know other institutions are in this boat too. We know we need to expand supplier diversity. But how do we identify, attract, and retain historically underutilized businesses?”

Procurement leaders also feel pressured to ensure that supplier diversity programs meet mandated targets without detracting from their teams’ other responsibilities. The stakes are particularly high for institutions with large federal research grants, as those who fail to properly report or achieve supplier diversity targets may be forced to return funds. When prioritizing these targets, procurement leaders may find it more difficult to meet other goals, namely maximizing cost savings.

7. How can I optimize p-card use on campus, including expediting p-card audits?

P-card audit responsibilities are increasingly shifting from internal audit to procurement. This forces procurement teams to devote more time to reviewing p-card spend for compliance with university policies at the expense of completing more value-add tasks. Collaborative participants also questioned if they have optimal p-card policies in place that minimize the cost per transaction while still mitigating the risks of p-card misuse by distributed campus purchasers. Further complicating matters, procurement teams struggle to capture p-card spend data and analyze it to inform future contract decisions.

8. How will we navigate the procurement talent crunch?

Procurement directors are concerned about addressing impending retirements within the procurement workforce. One Implementation Collaborative participant quantified this challenge and shared that she expects 30% of her staff to retire this year, while many others shared qualitative concerns. Procurement leaders who face shrinking workforces question how to both backfill roles in competitive labor markets and transfer knowledge to more recent hires.

9. How can procurement more efficiently partner with IT to evaluate security risks when sourcing “smart” products and other technology solutions?

As “smart” products, web applications, and software as a service (SaaS) proliferate, institutions are sourcing more technology solutions and other products with potential IT security risks. As a result, procurement leaders are working more closely with IT to evaluate contracts for compliance with data privacy and security requirements. While these partnerships are critical to mitigating security risks, several leaders described a tension between engaging IT and moving quickly in competitive bidding processes—and wondered how other campuses have navigated this tradeoff. As stated by one Collaborative participant,

“Especially with the growth of the Cloud, we have to fit IT security into our processes and time frames. It’s easier for my IT colleagues to talk directly to the vendor, but our IT security team is small and they can’t review all the contracts. This slows us down, but I have to ensure we vet the vendors’ security.”

10. Does procurement belong in a shared services center, and what other opportunities exist to streamline sourcing across institutions?

Collaborative participants questioned procurement’s place in a shared services center, especially as procurement functions evolve from transactional processors to strategic partners. System-level procurement leaders are also considering how to find efficiencies by increasing the number of cross-campus contracts and even sharing procurement staff across institutions.

Have a promising solution to share?

Contact the Business Affairs Forum research team if you’re a procurement leader interested in discussing your challenges and successes in a research interview.

Visit the Procurement Implementation Collaborative Resource Center for updates on the Collaborative and links to other Business Affairs Forum resources for procurement leaders.