The fundamentals of Procurement 2025; it’s not all that different than Procurement 2015 (maybe earlier)…

What I see every day at Green Cabbage is that procurement groups are vastly different across organizations. There is a wide spectrum of maturity, skill sets, processes, technology, and more. Multiple factors contribute to this wide spectrum: budgets, executive support, vision, reporting structure, data, procurement leadership, corporate strategy, etc....

Procurement technology has changed and evolved for sure. I can’t say that it’s all for the better, perhaps more confusing because there are so many options. AI is certainly a huge factor, but it is in the beginning stages of delivering measurable impact. I’ve worked within many procurement technology platforms, and they are all ‘okay.’ They help procurement organizations with RFPs, contracts, requisitioning, and more. But they are only as good as the design setup and the process in which the organization has built around the technology. Process, policy, and procedures are king within procurement groups. The business units that work with them should have a crystal-clear understanding of when and how to work with procurement. This is often not the case and can be frustrating to business units. It also leads to the perception that procurement is tactical and not strategic. The blocking and tackling within procurement remain consistent across many organizations that I have worked at, worked with, and speak with every week.

The end game for elite procurement organizations is to capture as much spend under management as possible to ensure every dollar out the door is spent according to the corporate policies. Top-tier procurement groups will have, on average, about 80% spend under management. Within that 80%, category managers/strategic sourcing professionals have a responsibility to make sure the process is followed. They also have the opportunity to become trusted advisors to the business.

A trusted advisor, in my opinion, is a sourcing professional that acts and delivers more like an internal business consultant. That means they are proactive, understand the market for their category, build relationships internally and externally, bring new ideas to the business, and are easy to work with. It’s a people business – credibility & reliability. If procurement professionals are not set up to have the time to achieve this level, they will remain reactive and not value drivers to the organization. It’s unfortunate that many organizations don’t fund the procurement group appropriately to allow this to happen. Yes, procurement organizations are still underfunded.

Savings are still a major contributor and/or lifeline for procurement groups across the globe. This has been the case for decades and will likely remain that way for decades to come. The procurement profession is certainly evolving, but is still rooted in basic principles – save money and mitigate risk. Technological advancements will continue to help, but it’s in a real transition period now, with how technology will replace or enable the profession. I think it’s both, it will replace and enable over time – just like other departments.

The beauty of Green Cabbage and everything that we bring to the table is that it doesn’t matter where the procurement organization falls on the maturity curve.

Exceptionally mature procurement groups: we enable them to achieve better outcomes with our data and subject matter expertise – especially with sole-sourced suppliers and suppliers that cannot be unplugged from their organization. You can RFP almost everything, but you still don’t know if you have the best outcome unless you have the market data.

Immature procurement groups: we do the above and we move them up the maturity curve within the organization very quickly!

The fundamentals of Procurement 2025 vs Procurement 2015 – not that much different.

Learn more at https://www.greencabbage.com

Written by Michael Schiappa, AVP of Sales, East Coast at Green Cabbage