Deloitte recently released their annual CPO Survey, which included responses from 481 procurement leaders from 35 countries. As usual, the report delivered some telling insights on the state of procurement now as well as challenges, trends and areas of focus for procurement organizations moving forward.I was drawn into the portion of the survey covering talent, which hit home to us as it helped quantify and validate trends we’ve seen firsthand.
Here are three takeaways from this year’s report:
Competition is Fierce in a Talent-Poor Environment
In a historically tight talent market with 50-year lows in unemployment, it’s no secret that the hiring landscape is utterly candidate-driven. Deloitte found that 55% of CPOs stated recruiting was more difficult than in the previous year. Without a doubt, the pure scarcity of talent is contributing to these challenges, not to mention a supply chain hiring boom that’s gone on for several years now.
This means qualified jobseekers in the field have a bevy of opportunities to navigate (DHL states one qualified candidate per six SC openings!), so there needs to be a compelling reason for these folks to select your position over several other suitors. We have been on the frontlines a few too many times pleading this case with our clients that either refuse to move quickly, can’t increase compensation or offer additional flexibility (PTO, work-from-home, etc.) and eventually learn the lesson the hard way when they lose out on talented individuals to their competitors.
While this may seem like moving mountains in Corporate America, nimble and forward-thinking procurement organizations know the added expense of winning the battle for talent will be more than justified when their teams can deliver ROI of 7.2-11X on average, according to CAPS research.
Analytical and Soft Skills Gap
As procurement has shifted to more of a value-add, strategic function with more visibility horizontally and vertically across companies, also shifting are the skillsets required of a modern-day practitioner. Undoubtedly , this is contributing to the aforementioned talent plague as these new needs deepen the delta between the high demand of openings and low supply of professionals that fit the bill for modern-day sourcing.
While blocking and tackling category management and strategic sourcing are still required, and top the list of technical training offerings CPOs plan to offer in 2020, there is a deep need for both digital/technological and soft skills. As sourcing technology evolves, there’s a need to not just master everything from P2P to SRM to Analytics, but also to use the data to develop strategies and translate the story to senior leadership. Finding folks who possess the whole package is a tall task.
In encouraging news, there appears to be a heavy emphasis on future training for critical skills like data visualization and predictive analytics, as well as business partnering and EQ re: soft skills, according to Deloitte. Investing in coaching for these skills will help increase retention, employee morale and of course, overall performance.
That said, this is leading procurement leaders to explore different strategies, thus…
Procurement Must Embrace the Blended Organization Model
An eye-opening stat from Deloitte’s survey found that only 46% of CPOs were confident their procurement teams could deliver on their procurement strategy, which is down from 49% last year. Think about that – less than half of leaders believe their teams can be effective in a time where procurement is more visible and, arguably, holds a position of higher importance in companies than ever before! Since we’ve already established new talent is tough to secure and multiple skills gaps exist with current FTEs, what’s a CPO to do?
One solution is to diversify the procurement groups resources and utilize a “blended” model. Instead of focusing purely on full-time resources, there are multiple other options companies can pursue.
One option is to bring in contract employees acting as SMEs or stop-gaps while you pursue an FTE. The gig economy is growing as many professionals, both experienced and junior, are bypassing permanent roles to pursue contract positions. As the report indicates, the self-employed population will triple by 2020 according to the 2019 Global Human Capital Trends report. In niche areas, procurement groups can benefit by turning to category expert contractors that require minimal ramp-up and can deliver immediate results. Only 11% of procurement groups use alternative labor effectively, so there is a major opportunity here to take a more modern approach to sourcing talent.
Another resource option is to identify partners within consulting and/or GPOs/consortiums. These resources can help bring additional expertise, buying power and benchmarking data that can be invaluable in non-core areas or categories where you don’t have in-house knowledge.
Recruiting, training and exploring alternative resources – all of these areas require significant investment from procurement groups and there’s no one-size-fits-all approach. But weighed against the opportunity cost of savings, value and reputational capital left on the table by being incorrectly or under-resourced, it can be an investment well-spent!