Technology Helps Lower Labor Costs, But Procurement Pros Still Vital To Success

A new study has found that implementation of digital technology has enabled procurement organizations to reduce their full-time workers by an average of 29 percent, lowering labor costs by 22 percent.

Research by The Hackett Group finds both buyers and sellers benefit from the technologies that automate processes, accelerate communication and shrink the distance between a global web of suppliers and customers. Specific areas where world-class procurement organizations surge ahead of their peers include operations and compliance management, areas where technology and automation have the most significant impact due to the routine nature of the work.

And, while there is less spent on labor costs, procurement teams possess better retention plans and lower turnover rates with the implementation of digital technology.

An article on Supply Chain Dive reports that while technology is indicated as a primary reason for this solid performance, professional dedication and high performing suppliers also play a crucial role. The article’s author points out that many procurement organizations often feel that they are not properly staffed.

“The pressures on procurement organizations to manage their supply bases while reducing costs and increasing overall supplier performance is never ending,” writes Rich Weissman.

Although technology certainly helps, the hard work and expertise of procurement professionals also needs to be recognized — especially since those professionals are often asked to juggle many issues on a daily basis and their skills are a multi-generational trait. In addition, high-caliber suppliers are invaluable because they can work independently, freeing up the buyer for more important tasks.

“A self-managing supplier goes a long way in filling in the gaps caused by organizational under-staffing,” Weissman noted. “As a profession, we have learned to leverage and appreciate these kinds of suppliers.”