2016 Canadian Procurement Forecast
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1 2016 Canadian Procurement Forecast The following report was prepared based on several months of research and interviews with procurement executives conducted by event producer Natasia Langfelder. In addition, survey data gathered from the benchmarking survey delivered during ProcureCon Canada 2015 appears alongside the industry analysis in this document.
2 Key Trends Effecting Canadian Procurement As this year s drop in oil prices affects the oil, gas, and construction industries, with the Canadian economy feeling the effects, procurement s value building ability is gaining in importance. Procurement s role is growing partly in response to an increased need for savings on the part of the companies that they work for. Protecting the bottom line through soft savings as well as assuming a strategic position intended to navigate towards greater value creation are both roles that procurement managers are taking on with an increased sense of urgency. Procurement s transition to a tactical department is putting executives in a position necessitating strong inter-departmental alliances. While managing the ascendency of the department, procurement executives must carefully cultivate relationships with other business leaders in order to strengthen it s own position and clarify where jurisdictions begin and end. Though procurement is being tasked with doing more with less, a proliferation of technology solutions aimed at automating processes and increasing visibility will allow them to handle the growing complexity of their roles. Though the responsibilities being assigned to procurement have continued to grow, so has the power of the technology solutions that are available to assist them in their missions. Updated ERP suites, improved spend analytics and market intelligence as well as other tools including P-cards and procureto-pay software will all play their roles in reducing the weight of a tactical workload and free up time for strategic responsibility. 2016: A year of Challenges and Opportunities for Canadian Procurement The growing influence of the department In the current economic climate, Canadian businesses require increased savings, as well as the maximization of the resources they already have, and procurement as a department is uniquely suited to this role. Procurement teams are moving towards a greater level of control over the total indirect spend within their companies. Thirtyseven percent of executives report that they account for between sixty-one and eighty percent of the total indirect spend within their companies, more than any other two responses combined. This reflects movement towards consolidation of indirect spending, with a growing number of procurement departments also assuming control over categories such as IT or contingent labor, which may have been directly managed in the past by other business units. Takeaway: Procurement departments need to be more strategic and less tactical. What % of your organization s addressable total annual indirect/corporate spend is addressed? 37% 13% 0-20% 18% 18% 15% 21-40% 41-60% 61-80% % Graph data taken from 2015 ProcureCon Canada benchmarking survey results 2
3 Analyzing spend and managing relationships in new jurisdictions Procurement s role is growing in order to curtail wasteful or hard to track spending in key areas, where procurement may have once been relatively uninvolved and now is counted on as a strategic, value-creating partner. Given the fact that procurement is being encouraged to take progressively more active roles relative to the spending in a greater number of departments, in order to emphasize their roles as creators of value they must actively build collaborative relationships and gain the visibility that they need. What Categories Have Your Highest Spend Percentage? 66% 40% 38% 38% 36% IT (Hardware/Software MRO (Parts/Equipment/Leasing/Maintenance) Human Resources Facility Management/Real Estate Logistics & Fleets 33% IT (Process/Automation) 33% Contingent Labor 29% CapEx. Construction 28% Travel/Meetings 26% Corporate Services/Finance Takeaway: Procurement s influence on other departments continues to grow. Graph data taken from 2015 ProcureCon Canada benchmarking survey results 24% 21% 19% 12% 12% 5% Marketing/Advertising/Printing Telecom Benefits Consulting Energy Legal Building the strategic aspect of procurement s role within the business While Canadian procurement teams have already succeeded in creating value and savings for their businesses, this initial success is a springboard propelling the department to a greater role within their organizations, that of a strategically minded core business partner. Describe your organization s strategic procurement maturity level: 45% Spend Focus: Total Cost, Consolidation, Compliance 30% Takeaway: The average Canadian procurement team lags 27% behind those of the US and Western Europe in terms of function sophistication. Graph data taken from 2015 ProcureCon Canada benchmarking survey results 15% 9% Process Focus: Efficiency, Business Involvement Transaction Focus: Supply Assurance, Price Negotiation Value Focus: Total Creation & Collaboration Product Focus: Demand, Amangement, Performance Supplier Involvement 3
4 ProcureCon Canada 2016 at a Glance February Hyatt Regency Toronto, ON Originally launched in North America 15 years ago to address direct purchasing strategies for manufacturing companies, ProcureCon has since expanded its focus to address the challenges and opportunities within the Canadian market. ProcureCon Canada assembles industry leaders with a uniquely Canadian perspective, pushing forward innovation within a collaborative atmosphere. Take a look at a special agenda preview below, showcasing how some of the key themes in procurement will be covered this year. The speakers were great and initiated some fantastic discussions. The variety of industries attending the conference also brought some interesting perspectives Danielle Gorla, Director, Supply Chain Corporate Goods Service, Shaw Communications Agenda Preview - Download Agenda Now Keynote: Effective Strategies for Optimal Risk Management Identify the most vulnerable areas of your supply chain Reigning in supplier risk: what should you measure and what does a cohesive supplier management strategy look like? Communicate with your vendor your expectations for information security and privacy and ensuring they have preventative measures in place, as well as a proactive strategy to handle security breaches Building shared risk into supplier contracts through effective negotiation Panel Discussion: Best Practices for Engaging with Stakeholders Industry leaders discuss what works and what doesn t! Key stakeholders much be engaged early in the procurement process in order to ensure support for key initiatives Building positive relationships with stakeholders Too much, too soon? Avoid alienating cross departmental partners. Best practices for internal relationship management Head to Head Debate: Social Media and Governance The world is on social media- but how should you use it? This session explores both the benefits and pitfalls to social media. This head-to-head debate features speakers who are passionately on either side of this issue debating the merits of their point of view. 4
5 Agenda Preview Continued Keynote: The Global Economy and The Canadian Procurement Professional Background on the current state of the Canadian economy Surveying the state of the global economy What this means for purchasing strategies through out the nation How to be as lean and economic as possible in a global environment with high economic Building and Maintaining Positive Long-term Relationships with Vendors Constantly sourcing, vetting and negotiating with suppliers is a drain on time and resources, investing in long term relationships with good vendors is key to driving savings Communicating partnership goals and expectations early on to avoid miscommunications down the line Designing a process to provide rapid feedback to vendors in order to stay on track Foster an environment of trust and collaboration to accomplish mutual goals Why Attend ProcureCon Canada You ll learn the latest best practices and talk about the latest issues in Canadian procurement, in an open forum with your peers. 2 A collaborative and supportive environment where you and your peers can get to the heart of issues through roundtables, detailed sessions, and casual networking opportunities. 3 Opportunities to compare and contrast the most cutting edge technology solutions supporting procurement s transformation into a strategic and highly influential business unit. Learn more about how ProcureCon Canada can help benchmark and build your strategies, as well as your professional network! Get More Info Download the ProcureCon Canada 2016 Agenda 5
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