The procurement sector is facing a meaningful skills shortage. The crisis threatens to undermine procurement’s ability to deliver on key strategic objectives like driving ESG goals, and creating new strategic opportunities for the business as a whole. Could procurement-as-a-service solutions be the answer?
A report by the Hackett Group found that 46% of procurement leaders expect labour and skill shortages to continue disrupting business during the coming year. Similarly Amazon Business’ 2024 State of Procurement report found that “retaining and developing existing talent” and “attracting or hiring top new talent” were top priorities for 86% and 84% of CPOs, respectively over the next one to two years.
The skills shortage
This shortage has arisen due to several factors. The nature of the procurement process creates demand for skilled professionals with a skill set that includes negotiation, strategic thinking, data analysis, and supplier management.
The increasing complexity of global supply chains and the widespread adoption of digital technologies require procurement professionals to adapt quickly and acquire new competencies, further exacerbating the shortage. Not only is procurement becoming less transactional and more strategic—increasing the complexity of the discipline—but increasing integration of artificial intelligence (AI), machine learning, and other cutting edge technologies is exacerbating the skills gaps in existing workforces as well.
Finding individuals with a blend of these skills is challenging, and has led to a sizable talent gap that is only expected to grow. This is time sensitive, as the ageing workforce in procurement, coupled with a lack of investment in training and development programs, has contributed to a dwindling pool of qualified professionals entering the field, exacerbating the skills shortage even further.
Addressing the procurement skills shortage will require proactive measures from both corporate organisations and educational institutions to attract, train, and retain talent in the procurement sector.
In the meantime, many procurement organisations are looking to automation as a stopgap, but applying technology to solve a problem that stems in part from a lack of tech-savvy talent has obvious flaws, and there are many elements of procurement that rely on more strategic thinking and social soft skills than automation can compensate for.
Demand for Procurement-as-a-Service
In February 2024, global consulting firm Accenture made the latest in a string of procurement and sourcing-related acquisitions with the purchase of Insight Sourcing.
Insight New Sourcing is a strategic sourcing and procurement services provider which specialises in helping its clients reduce costs when managing spend and negotiating contracts for direct materials like metals, electronics, food ingredients, chemicals, clinical services; indirect materials like logistics, packaging, IT, marketing; services related to capital expenditures like construction, and facility equipment; and energy procurement management.
Accenture plans on adding around 220 consultants to its staff, along with a suite of digital tools, through the acquisition process. The companies, according to Rob Fuhrmann, global lead for sourcing and procurement at Accenture, will “combine expertise across direct, indirect and capital expense cost reduction with complementary data and technology capabilities to drive efficiency and resilience across [their] clients’ supply chains.”
What is Procurement as a Service?
Procurement as a Service operates on a similar premise to the Software as a Service (SaaS) model.
Rather than depending solely on internal teams or conventional procurement methods, businesses can opt to delegate a portion or all of their procurement requirements to a specialised provider equipped with technology, personnel, and specialised knowledge to manage sourcing tasks. Theoretically, the model enhances organisations’ spending control and could provide a more strategic pool of procurement skill and labour for relatively low short-term investment.
In 2022, the global procurement as a service market was valued at $6.15 billion, with an estimated growth of 11.1% from 2023 to 2030. Accenture’s investments point towards a clear rise in demand for procurement and sourcing consultation, as organisations turn outside their own walls to tackle the increasing complexity of managing the procurement process.
