Top 10 issues in procurement business in 2012

February 8, 2012: The following are the top ten issues that are expected to impact procurement business:

  1. The main issue with any of the enterprise is the revenue growth and the next important issue is the improvement in operating margin. As a result, enabling growth and revenue were the important issues in procurement for going after cost saving.
  2. Procurement budgets did not make any marked changes, but headcount was estimated to increase slightly, demonstrating some wage pressure which was partly driven by a move towards increased specialization and offshoring; mainly in transactional areas.
  3. FTEs in the low cost economies are estimated to increase from 16 per cent to 25 per cent in the coming years.
  4. Outsourcing is estimated to increase gradually and drive the offshoring trends in the case of knowledge base activities.
  5. Procurement is in a better position as compared to its functional partners in the case of delivering value services to the organization. Procurement is considered as an area with the lowest number of problems and is far better when compared to other areas such as Information Technology and Human Resource.
  6. Talent management came down the line of priorities down by few positions from it number 2 position, but still is an important issue as organizations try to re-define their procurement delivery model. Here again outsourcing is expected to help procurement firms to meet talent acquisition related challenges.
  7. Another issue that will be a concern is the supply risk. This is followed by working capital improvements. Supplier risk has widened from supplier viability or supplier continuity to a wider approach that consists of supplier compliance.
  8. With an exception of few firms that are doing well on supply chain, supply-side sustainability is still an issue to ponder about in a big way.
  9. In the case of capability building, SRM and category management made large impacts, as was improved quantification of higher value contributions made by procurement. The adoption of Lean and Six Sigma in procurement is gaining importance, even though they are way down in the list of priorities.
  10. Enterprise Resource Planning is increasingly upgraded, but more activity is observed in the areas such as Analytics, and Supply Market Intelligence.

This list cannot be considered as a complete one as there are other issues in procurement which are specific to different industries.

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