2020 Outlook – Project Procurement, Diversity, and Climate Risk

The saying ‘Change is the only constant’ could have been written with the procurement sector in mind.

We see wave after wave of procurement transformations and restructures across ASX 100 and leading private and public institutions, usually with the exit of a CPO and a change in philosophy from the new incumbent.

But change isn’t a bad thing. The Romans knew that they needed to expand their empire or risk stagnation; similarly, procurement functions need these periods of flux in order to access more and more benefit for businesses.

This was our view of 2019, essentially the cycling and renewal of procurement functions without any great step-change or disruption.

We don’t believe that 2020 will be the great year of disruption, either, but there are some interesting trends we believe will define the year of Procurement:

  1. Project-based procurement: it might seem like self-promotion, but Augment has experienced more than triple the number of requests for contract or project hires in the six months leading up to Christmas than the same time period last year. Augment’s Operations Director, Kanika Fehr, believes this trend will only strengthen in 2020. “We see large organisations with immediate needs turning to high-caliber Contractors with specialist experience rather than invest in full time resources or costly consulting teams – especially in areas like IT procurement, travel, and energy spend, where particular skill sets are required to execute.”
  2. Diversity is now an expectation of procurement leaders. While diversity has been an agenda item for CPOs for some time, it’s now been normalised as part of the selection process. While in contractor scenarios hiring managers want to hire the best possible person available at short notice, more and more attention is being paid to the gender and cultural diversity of teams.Experience procurement executive, Christine Haddo, elaborates further: “Successful procurement professional recognise and practice the value of gender and cultural diversity of teams. By addressing these gaps organisations have the genuine opportunity to harness holistic value benefits, particularly greater emotional intelligence, innovative solutions, and problem-solving mindset. The full support of the executive and entire organisation, at all levels, male and female is imperative to drive a gender and cultural norm.”
  3. The shift continues towards genuine business partnering, and beyond. While it’s true some procurement functions still act more as gatekeepers than enablers, it is becoming more and more common for procurement functions to be regarded as a genuine facilitator of business outcomes. Chairman Len Blackmore goes further “The next real evolution as I see it is supplier network management, becoming more and more interested with business and supplier’s key activities.”
  4. Social values and procurement decisions will no longer be separated. We’ve seen enough in the news in 2019 to know that athletes, actors and CEOs whose behaviours are misaligned with corporate values are being taught swift lessons. In an age where brand value and nps are critical business indicators, and customers speak with their keyboards as well as their feet, we believe 2020 will see ethical sourcing of primary importance (although, it really should just be sourcing, as all sourcing should be ethical) – the impact of modern slavery reforms will just be the beginning!
  5. Climate change is already having an effect on supply chains. The photo in this article was taken in Augment Director Brendon Booth’s home town of Corryong, where the worst fires in Australian history ravaged the small country town and much of country Victoria and NSW. A short time later, floods have caused similar damage to many outlying farms. The flow on effects of these disasters, and the ones that will surely follow, cannot be underestimated. Already we are hearing that the medical supply chain is being impacted, in addition to real questions being asked around food security.
Share this post