Procurement & Supply Chain – Market and Hiring Trends 2021
As 2021 draws to a close, we are pleased to report our findings and observations from the last quarter.
This year has been fraught with supply chain crises, blockages in the Suez Canal, rising material costs, labour challenges, the great resignation, volatility in the energy markets, increased environmental pressures, and public sector transformation. These are just some of the challenges that Procurement and Supply Chain professionals have been forced to overcome.
However, there is a significant positive to all this disruption. 2021 marks the year in which Procurement and Supply Chain professionals no longer must fight for their place at the executive table, regardless of industry. Employers in every sector have invested heavily in procurement capability, resources, and technology. There is a new-found focus and appreciation for supply chain professionals who are now seen as enablers and innovators. The critical role that these functions play has never been clearer, and we are beginning to see this translate into improvements in remuneration, investments in talent development programmes, and even the opportunity for functional leaders to display their ability in broader, strategic leadership roles. Following in the success of Apple’s Tim Cook, perhaps 2022 is the year in which we see more CPOs make the transition to COO and CEO?
Banking and Financial Services
It has been another strong quarter with several placements in the sector. Financial services have identified a range of different pressures which procurement can assist with. There is a need for more flexibility in the cost base, and continued investment in digital and AI-based technologies can help deliver to the business. This means that procurement teams require a more creative approach. We have worked on several assignments that requite a different approach to optimise third-party spend management. Procurement Transformation is still a major focus, and we see this continuing into 2022. Whilst many financial services have looked to coordinate digital transformation projects across the board, those who have, have found the cost of such projects can rise to unmanageable levels. Many institutions are facing these excessive costs at a tough time.
Third-party spend is one of the largest components of financial services firms’ operational expenditure. Digital transformation has been a key theme for several years and has accelerated during the past year as many businesses look to adapt to remote/hybrid working, online customer demand and increased digitisation. This is proving to be another process where procurement is driving performance for financial services. The power of procurement in contributing to the positive movement of these indicators is leading financial institutions to join a growing movement across sectors to rethink the role of the procurement function.
Third-party spend has been increasing for many years now. In banking, business leaders need to be prepared to think carefully about optimising procurement and positioning third-party spend as a key component of profitability. Procurement is now viewed as a forward-thinking function in financial services and as a business enabler.
During the period, we have placed a Head of Procurement with a payments firm and a team of contractors to work with a major investment firm. We have also placed a Head of Supplier Management with a major asset management firm and a Director of FM and Property Sourcing with a global investment bank. Demand continues to grow as we work on some particularly challenging assignments. Competition is fierce for the best candidates who often have multiple offers.
Consulting and Outsourcing
Consultancy continues to be especially buoyant. After a year of turmoil, businesses look to procurement to provide stability, and consulting firms can provide the support that is needed. It has certainly been our busiest sector this quarter. Organisations are increasing their transformation efforts, implementing modern technology, developing new capabilities, and adapting their operating models.
There have been several smaller consulting firms that are competing favourably with the larger organisations. They are improving procurement agility through simplification, and they are elevating the role of procurement business partners to one of business enablement leaders who can develop and maintain strong relationships. The range of projects has been varied and interesting. Firms are enhancing third-party risk management capabilities across a broader range of risk exposures, going deeper into the supply chain, and continuously monitoring risk throughout the supplier life cycle.
Most of the assignments have been in broad procurement transformation and recently we have focused on Coupa and Ariba implementation projects. We have placed a Head of Practice with a mid-sized consulting firm and a full team to work with a big 4 organisation. We also have ongoing assignments with two smaller firms that have ambitious plans their grow their practices. It is certainly a sector that will continue to grow well into 2022.
Energy and Utilities
The Energy and Utilities sector remains a significant focus within our Procurement and Supply Chain practice. COP 26 has been the subject of much media attention. It has been encouraging to see global leaders collaborating to overcome the significant environmental challenges we all face. This global commitment to environmental sustainability is a critical and promising first step. But we must deliver.
We are working hard to ease the energy transition by supporting our partners and innovators within the power generation sector. We have successfully identified the UK&I Managing Director for a blue-chip integrated energy solutions provider, supported a global facilities management business in the formation of their sustainable sourcing department and are currently assisting in the growth of a telecommunications developers procurement and commercial team, who are investing heavily in secure, sustainable digital infrastructure.
In the last quarter alone, we have all seen significant increases in the wholesale (and subsequently, retail) cost of electricity and gas, alongside short-term disruption in the distribution channels of many of the UK’s fuel retailers. The role that innovative Procurement and Supply Chain professionals play in the management and avoidance of disruption is key to success during this volatile supply market. This has created opportunities across all industries as business leaders have been forced to rethink and reinvest in their supply chain strategy.
Within the water sector, we continue to identify strong commercial professionals to support the investment programmes required to overcome challenges around storage, delivery, and treatment. Our most notable project was supporting in the implementation of a new procurement transformation programme by successfully identifying a new Procurement Manager (Head of) and Procurement Business Partner.
We have also supported a long-standing client within the Oil and Gas sector on an interim technology sourcing assignment, alongside identifying several interim contracts advisors for a new project in Africa. It is encouraging to see the diversification of many traditional Oil and Gas companies, and we are excited to support our partners on new projects encompassing their investments in solar, wind, hydro, EV, and energy storage infrastructure.
There has been a notable increase in demand for procurement professionals within the infrastructure consultancy sector. We have supported numerous practices in the growth and development of their advisory functions, with a variety of national assignments from consultant through to director level. Competition for commercial talent with expertise in major public sector infrastructure projects is fierce. For developing procurement leaders, infrastructure expertise combined with a deep understanding of NEC, JCT, FIDIC, or IChemE contracts offers the route to an exciting and lucrative career path.
We have seen a stabilisation of the market within the affordable housing sector and there has been few mergers and acquisitions compared to the past 18-month period. The emphasis now is on growing talented procurement teams, with a strong focus on implementing ESG assessments into all tenders. The events of the past 24 months have changed priorities for many procurement professionals, and we have supported numerous providers in identifying and securing private sector talent. Despite the significant challenges surrounding development, materials supply and cladding, the affordable housing sector is well positioned for professionals looking to reassess their work-life balance and make a positive social impact.
The residential development sector continues to tackle significant challenges surrounding material supply chains. Volatility in price, logistics and quality has put procurement professionals to the forefront of many organisations and we have seen significant investment in addressing ESG goals. We have supported a national developer in the formation of their new sustainable sourcing function and are pleased to see their progress in promoting local supply chains, utilising reduced emissions plant, and trialling a range of sustainable materials.
The Modular construction sector continues to grow in prominence. We have utilised our expertise within both manufacturing and construction to support several high-level appointments, and we are proud to field a diverse team covering all leadership functions within this innovative sector. Of growing importance is the ability to identify and attract innovative leaders who can provide expert advice on supply chain strategy, technology, and delivery. We anticipate that demand will increase in this sector as significant investments continue to be made, and we look forward to supporting in the delivery of more supply chain projects.
Facilities Management and Real Estate
While questions continue to surround the future of the workplace, investors and service providers within the Facilities Management and Real Estate industries remain confident of the critical role that offices play in promoting collaboration across companies.
Despite initial projections, there has yet to be any significant consolidation of real estate networks within the UK. Many employers continue to wrestle with their workforce location strategy, and we have seen a broad variety of office, hybrid, and remote strategies in place.
FM service providers are capitalising on their expertise to provide a variety of specialist services including supply chain advisory, digital infrastructure procurement and energy optimisation. There is a significant focus on reducing carbon emissions from the built environment and we are becoming increasingly involved in supporting procurement leaders to identify professionals who are passionate about achieving net-zero.
The core expertise in this sector remains around hard and soft FM procurement, though this is increasingly being challenged by fast-growing functions encompassing data centres, logistics, and advisory. PSD has been involved in a broad variety of projects across this sector where we have also sourced talent from across the technology, consulting, manufacturing, and construction industries. We anticipate the needs of procurement functions within this space growing alongside the variety of services being offered.
We will soon be releasing the first of our series of insights into Procurement and Supply Chain leadership with Andrea Greco, most recently Global CPO of CBRE Group. He joins us to discuss the practical steps that business leaders must take to address and accelerate their ESG goals.