By Sarah Scudder
According to U.S. Census Bureau population estimates, millennials will become the nation’s largest living adult generation this year. Pew Research Center has estimated that millennials are now the largest generation in the U.S. labor force, surpassing both Gen Xers and Baby Boomers. In 2017, millennials constituted 35% of the U.S. labor force, while Gen Xers accounted for 33% and Baby Boomers represented 25%.
The millennial generation is generally defined as individuals born in 1981 through 1996 (ages 23 to 38 in 2019). Therefore, many millennials have been in the workforce for more than 10 years and now hold jobs with substantial responsibilities, including jobs that involve making business-related purchases.
Numerous research studies have shown that millennials are playing significant roles in business buying decisions. For example:
- In a 2019 survey of 712 business technology buyers by TrustRadius, 59% of respondents were millennials, and almost 30% of the millennial respondents said they are the lead buyer.
- In a 2015 survey of nearly 1,500 employed millennials by Merit, 73% of respondents said they are involved in purchase decisions at their company, and 34% reported being the sole decision-maker for their department.
Most of the published research has dealt with the attitudes and behaviors of business buyers, not sourcing professionals. But growing numbers of millennials in the workforce, combined with the retirement of Baby Boomers, are also shifting the demographics and changing the landscape of the procurement function.
Earlier this year, UPS published the results of its 2019 Industrial Buying Dynamics study. This research was based on a survey of 1,503 buyers in the United States who purchase industrial parts, products or supplies in fifteen industries. The average annual revenue of the companies represented in the survey was $6.8 million. The three largest industry verticals represented in the survey were general manufacturers/processing (14% of respondents), hospital/healthcare (10%) and contractor/service provider (10%).
As we might expect, the UPS research revealed that the number of millennials working in procurement is growing rapidly. In the 2019 survey, 38% of the respondents were millennials, up from 28% in the 2017 edition of the survey.
One of the most pervasive ideas about millennials is that they are digital addicts who prefer to do everything online. While this view is an oversimplification, it does have a basis in reality. millennials are the first generation to grow up surrounded by digital technologies. Many millennials have been using digital technologies since they were children. So on average, millennials are probably more comfortable and more proficient with digital technologies than older generations.
The UPS research confirms that millennial sourcing professionals are very tech-savvy and more likely to rely on digital technologies than older buyers. For example, when conducting research, the top-two sources of information for all generations are company websites and online search engines. But while the third source for Gen Xers and baby boomers is company sales reps, millennial survey respondents ranked social media as their preferred third source.
UPS also found that millennials are more likely than older buyers to make purchases through e-marketplaces. In the 2019 survey, millennial respondents reported making 30% of their purchases via e-marketplaces, compared to 27% for Gen Xers and 25% of Baby Boomers.
The shifting demographics of the procurement workforce presents companies with both opportunities and challenges. One of the defining attributes of millennials is their level of comfort with technology. What often distinguishes millennials from older generations in the workforce is their ability and willingness to quickly adopt and use new technologies. So the growing number of Millennials in procurement may make it easier for companies to implement new procurement technologies.
But the relationship between millennials and technology also creates a challenge for procurement leaders. millennials’ expectations for technology are higher than previous generations because they have grown up in a world of technology abundance. Technology is firmly embedded in the everyday personal lives of millennials, so they also expect to have technology tools at work that are fit-for-purpose and easy to use. As a result, companies that haven’t implemented the latest technologies will find it more difficult to attract and retain Millennial employees.
One area of procurement that needs attention from a technological perspective is the purchase of printed materials and marketing services. In most companies, the supply chain for printed materials and marketing services is filled with processes that are highly manual and therefore cumbersome and time consuming. Many sourcing professionals who manage these spend categories are still relying heavily on some combination of spreadsheets, word processing documents, emails and telephone calls.
Many companies have now implemented procurement software systems, but general purpose software applications aren’t usually well-suited for sourcing many kinds of printed materials and marketing services. They don’t capture the level of detail or the specialized characteristics that are needed to provide prospective suppliers with adequate descriptions, and as a result, buyers are often required to manually create product/service specifications.
E-sourcing applications that are specifically designed for printed materials and marketing services don’t have these limitations. Therefore, they will significantly streamline the procurement processes relating to these materials and services. Just the kind of technologies that millennial sourcing professionals want to use.
This article first appeared in Future of Sourcing here.