Two of the biggest challenges facing procurement leaders are recruitment and retention. Staffing issues were identified as one of the biggest risks facing procurement in the next two years by Amazon Business’ 2024 State of Procurement Report, as the procurement function “broadens in scope while facing staffing shortages”.
It seems as though the more critical procurement becomes to the modern enterprise, the more the cracks in the talent pool begin to show. With increased technological adoption and a growing emphasis on strategic operations (compared to a traditional transaction-focused approach) in the procurement function, solving the talent shortage is more critical than ever.
As we’re still in early 2024, we’ve put together the top five factors driving the talent shortage, as well as how procurement leaders can address them in order to capitalise on the opportunities in the industry and meet the strategic objectives of the business as a whole.
1. Digital transformation
Ironically, the very trend that’s driving the rise in procurement’s fortunes is also one of the biggest factors fueling its talent shortage. As digital transformation reshapes the procurement function from top to bottom, it also means that the skills necessary to succeed in procurement roles are changing. Even a few decades ago, a procurement job was a mixture of relationship management and sending invoices. Now, there’s AI to grapple with, big data analytics, and an expectation that the department will be a key strategic driver of efficiency, sustainability, and supply chain resilience. The skill sets that make a successful procurement team today aren’t the same as they were even a few years ago.
How to fix It: Education and development should be at the forefront of anyone’s mind looking to build a successful procurement function. Upskilling and growing the team’s knowledge base is almost always more cost effective than hiring externally, but you should also know when to look beyond the department to fill a talent shortage, even if that just means sniffing around the IT department for anyone not nailed down.
2. Competition (internal and external)
If (almost) every procurement team is short on staff (well, 86% of them, according to Amazon Business), then it’s no surprise that competition for top talent is fierce. Salaries are rising, and the fact the talent shortage is affecting departments other than procurement means that procurement is in competition, not only with other procurement teams, but with other departments in its company for talent and the money to pay that talent.
How to fix It: Smaller firms without the resources to compete might consider outsourcing their procurement functions, engaging third parties like a business might engage a legal team or a management consultancy.
3. Messaging and awareness
Or lack thereof… Seriously, procurement may be the exciting new frontier of digital transformation and strategic optimisation, but traditionally the department has largely existed as an afterthought—a place where purchase orders go to be rubber stamped. The nature of the role may be changing, but perceptions are harder to shift. If the preconceived notion is that procurement is a stodgy, backwards profession, then it’s unlikely to attract the best and brightest graduates, let alone funnel MBAs into a procurement-specific pipeline early on in their education.
How to fix it: Take a leaf out of the broader supply chain discipline’s book and go on a two-pronged charm and educational offensive. By working with educational institutions and recruiting heavily from adjacent industries with transferable skills (increasingly easy to do given the increasingly digital-first nature of the discipline), new talent can be enticed into the procurement space and developed from there by existing veterans.
4. Demographic shifts
Tied into Number 5, the natural changing of the guard is a large part of what’s ushering in a more discerning labour force. It’s also seeing Boomers and Gen X either exit the workforce into retirement or be promoted up into senior management, where the skills that made them an asset to the company on a day-to-day basis are less important to their roles.
Also, as Millennials age up towards middle management there aren’t as many members of Gen Z entering the workforce to replace them. It’s the same further up the chain as the populous Baby Boomers are replaced with the relatively sparse Gen X.
How to fix it: One way to encourage a smoother transition from one generation to the next—especially in an industry where relationship management plays such a huge role—is to encourage mentorship and development aimed at transferring skills and key knowledge from senior staff to lower (even entry level) positions.
5. The Great Resignation
Sparked by the COVID-19 pandemic, as well as a general rise in pro-labour sentiment across the economy at large, the last few years have seen a spectacular rise in employees quitting the roles that couldn’t be bothered (or afford) to pay them enough or treat them fairly. The consequences for mismanaging teams are much higher in a world where the stigma over changing roles regularly for better pay, hours, and working conditions has more or less evaporated.
How to fix it: It should be obvious, but people keep quitting their jobs, so the message must not be getting through. The age of pizza parties and casual Fridays are over. Employees expect more from their employers, whether in terms of wages, benefits like healthcare, work-life balance, and other meaningful contributions to quality of life. In addition to benefits on paper, fostering positive cultures, creating opportunities for development and salary advancement are all a big part of not only attracting new talent but keeping it as well.
