The Impact of The Great Resignation on Procurement
The world—and the workplace—is evolving rapidly, and with change comes shake-ups within procurement and beyond. One of the shifts we’re seeing is the Great Resignation. It’s transforming the workplace (and isn’t going anywhere anytime soon).
Since this trend of workers resigning en masse is here to stay, inherent risks come with this change. We’ll explain the risks most closely related to procurement and the supply chain, and offer advice on how you and your team can best navigate the Great Resignation.
The Great Resignation and Procurement Today
Investopedia defines the Great Resignation as “the elevated rate at which U.S. workers have quit their jobs starting in the spring of 2021, amid strong labor demand and low unemployment as vaccinations eased the severity of the COVID-19 pandemic.” The Great Resignation is having a significant impact on procurement and well beyond the United States. We will look at the main issues and discuss how—amid the onslaught of departures—you, as a procurement professional, can influence more spend with the same effort and support the team you still have.
Cost of Replacing Procurement Professionals
The process of sourcing, recruiting, and onboarding a new hire can drain a company’s resources and finances. It’s a costly endeavor, and it can be even more expensive if a new hire doesn’t stick around. This is true for all industries, not just procurement.
To give you a more concrete idea, a study from The Society for Human Resource Management (SHRM) reported that, on average, replacing a procurement professional can cost a company upwards of six to nine months of that employee’s salary. Factor into that equation that it reportedly takes 36–42 days to hire an employee in the U.S., on average, and six months for a company to recoup the cost of a new hire. This is currently resulting in a perfect storm that ultimately costs a company from one-half to two times an employee’s salary to replace them.
As companies struggle to fill roles within a market where workers are in high demand due to scarcity, many firms have been left to operate understaffed. After all, demand doesn’t stop just because the staff is dwindling. But it affects productivity and volume, which we see directly in procurement due to staffing shortages resulting from the Great Resignation and an ongoing pre-existing talent shortage.
According to Gartner, 52% of procurement leaders have seen their procurement staff decrease substantially over the past two years. This is having an immense impact on areas like transportation. For instance, in 2021 the truck driver shortage reached 80,000 and is expected to grow to 160,000 by 2030. Due to the lack of drivers and high customer demand, we are seeing ongoing supply chain disruptions.
Doing More with Less
As a result of the mass exodus of procurement professionals, companies’ remaining employees have now been tasked with what can feel like mission impossible, at least until more team members are found (and sometimes long-term). And they still have to get it all done, even operating with a skeleton staff. Simply put: We are learning that doing more with less is necessary.
The Procurement Talent Shortage in 2022
More issues arise as we now face a massive talent shortage in procurement in 2022. Along with the Great Resignation and a talent shortage, many skilled workers are reaching retirement age. Enterprises are losing decades of sourcing knowledge and need to replace seasoned talent with newer procurement talent.
Despite retirement becoming a recent concern, procurement’s talent shortage is not a new issue. It has been ongoing for years, but things seem especially dire now.
Just how bad is it? According to a Korn Ferry report addressing this situation, statistics show that by 2030, more than 85 million jobs could go unfilled simply because there just aren’t enough skilled workers qualified to perform them.
It’s not all bad news, though. Far from leaving you to contemplate our current procurement predicament alone, Arkestro can help you and your procurement team succeed. This includes showing you how to keep your colleagues motivated and strong amid any upheaval.
How Can Arkestro Support Procurement Teams?
Most businesses have witnessed firsthand how much technology revolutionizes how we do business. This includes how technology can help influence more spend with the same effort and make the best buying decisions faster across all spend. Arkestro is the solution.
How do you influence more spend with the same effort? We combine machine learning, human behavior science, and game theory to help you find the right supplier, at the right price, right now.
With Arkestro’s embedded procurement platform, there is no software to install, complicated and frustrating user training, and no login for suppliers.
The time to act is now. According to Anthony Klotz, who coined the term “the Great Resignation,” “We are not going back to the world of work in 2019,” and “these new changes are here to stay.”
Contact us today to find out how you can move forward, not back, reducing your procurement workload, speeding processes, influencing more spend, and making the best buying decision faster.
Want to learn more? Join us for a webinar at 10 am EST on October 5th, 2022: “The Great Reset: Taking on the Global Challenge to Find Procurement Talent?” Save your seat here.