An Increasingly Digital Procurement Function Lacks Talent Required for Future Needs

The procurement function has dramatically evolved over the last few years as business leaders continue to digitize processes. Artificial intelligence, automation, data analytics, and the growing importance of strategic sourcing are just a few areas on which procurement executives continue to focus.

Businesses have been forced to respond to supply chain disruptions, geopolitical tensions, and an ever-evolving consumer with increased agility and resilience through technology and innovative solutions. A big part of that is changing what and how an organization buys, according to a report from McKinsey.

“Chief procurement officers (CPOs) who have successfully navigated uncertainty in recent years have become indispensable partners to the executive suite,” said the report. “As the CPO of a manufacturing company noted to us, ‘Never before has procurement been core to so many executive committee-level priorities. We now have a real seat at the top table. And this is not a temporary situation—this is how we will operate going forward.’”

“To thrive in the future, procurement needs a new breed of professionals who possess a diverse skill set. The buyer of the future combines the traditional procurement tool kit and category expertise with a new set of capabilities in advanced data analytics, sustainability, and strategic thinking.” .

— McKinsey

As the day-to-day functions of procurement continue to change, the type of employees required to perform these duties must also evolve. With that, research from Gartner finds that only 14% of procurement leaders express confidence in their talent’s ability to meet the future needs of the function.

“Procurement leaders are generally confident in the current state of their talent and the ability to meet their near-term objectives,” said Fareen Mehrzai, senior director analyst, Gartner’s Supply Chain Practice. “However, our data shows that chief procurement officers are worried about the future and having sufficient talent to meet transformative goals based around technology, as well as the ability to serve as a strategic advisor to the business.”

The McKinsey report draws similar conclusions, explaining that procurement’s expanded role means a reinvention of its internal structures and talent model, including developing what they call “the buyer of the future.”

“To thrive in the future, procurement needs a new breed of professionals who possess a diverse skill set,” said the report. “The buyer of the future combines the traditional procurement tool kit and category expertise with a new set of capabilities in advanced data analytics, sustainability, and strategic thinking.”

Among these changing capabilities, Gartner reported a shift in the key competencies CPOs need to help drive objectives associated with procurement transformation. The survey of 111 procurement leaders found 69% of respondents said business acumen had gained importance in the last 12 months, while 68% said technology and data skills had increased in importance. Only 26% said “traditional procurement competencies” had gained importance in the same period.

Gartner’s survey data also suggests that more work needs to be done in refining competency planning strategies to meet future talent needs in the procurement function. While more than 65% of respondents reported that their organizations have dedicated strategies to target the most critical competencies, only 31% believe that their current competency models are relevant to their staff’s work.

“In evaluating current competency levels, we see procurement leaders relying most on peer and stakeholder feedback, while less than half report engaging in competency-driven interviews to directly evaluate their staff’s skills,” said Mehrzai. “Considering the significant gaps in the most critical future competencies, CPOs need to consider expanding their options in how they train and evaluate their staff.”