Top procurement priorities for 2023

Australian procurement teams’ top procurement priorities for 2023

Grosvenor undertakes annual research into the State of Procurement and Contract Management in Australia. Over the past five years, we have talked to 590 organisations to track what is top of mind for their procurement teams (refer Figure 1). We have seen the importance of cost reduction in 2019 towering over all other goals, followed by risk mitigation being key during the COVID years.

Over the past two years, the focus has well and truly been on delivering value to external and internal stakeholders. For private companies, this is mostly a good return to shareholders; for government procurement teams, it is maximum value for taxpayer’s money. The thinking is that if prices go up in a world constrained by inflation and a tight labour market, then, “let’s at least get the most performance for our stakeholders”.

This year (2023), our research ‘Geared to High Performance’ found the top priorities (goals) for procurement teams are:

1. the ability to deliver results for external stakeholders, such as taxpayers, the wider community and shareholders (24%)
2. the ability to improve the way the business operates (18%)

Coupled with the importance of innovation through the supply chain (which has jumped to 13%), organisations once more discover that contract management, vendor management and strategic partner management are the key levers to deliver on these goals.

To deliver on these goals, procurement teams need to shift their thinking:

1) Away from sourcing to contract management. The days in which a contract was ‘thrown over the fence’ for management by the business are over. At the very minimum, sourcing teams need to consider in the very early stages of a project, how the contract will be managed and maximum performance will be achieved. This includes things like including KPIs, but moreover, it also includes uplifting the capability of the contract management team

2) Away from cost cutting to clearly describing what ‘good’ looks like. This is in the specifications and requires a clear articulation of the critical success factors. No need to be very detailed on exactly how the work needs to be undertaken, suppliers know that all too well, and doing so may actually constrain innovation. Instead, focus on describing ‘why’ a certain activity is required – a problem statement not a solution statement.

3) Being an enabler of the rest of the business, not a gatekeeper. Procurement professionals add most value when they ask questions, based on their unique understanding of the whole organisation and using their commercial skills. Procurement should be problem-solvers and good listeners, rather than someone trying to overly focus on the process and compliance.

 

What are your top procurement priorities? Dr Stefan Gassner would be happy to discuss your top priorities and/or challenges and answer any questions you may have about the State of Procurement in Australia research. Book a meeting with Stefan