Home Articles News Product Focus Jobs Events Contact us Subscribe to Newsletter

Future-proofing procurement in the 21st century

26 July 2017

At a time when business is warming to procurement’s contribution, the skills required by our profession must become stronger than ever before. In fact, learning and development must be continuous and embrace a broad range of skills and capabilities.

To become fully effective as a strategic business partner, procurement specialists must have people skills, business skills and new procurement skills. In terms of training and skills development, I get a sad feeling that everyone is looking the other way, waiting for someone else to lead this vital role. We are often told that this is everyone’s responsibility, but especially that of the procurement individual. According to our professional body, CIPS, talent management is a key priority for the 21st Century. However, an individual rarely knows what they need. This is especially true for a category or contract manager as they are often too preoccupied with the daily grind and detail to have a wider perspective on their own skills.

The problem with training
If you undertake training courses for category management, contract law or negotiations, then surely it is “job done”, right? In truth, this approach to improving procurements skills is not effective. So we cannot be surprised that the output from this approach is confusing to others. A starting point is often an individual development plan. However, this is seldom coordinated or cross-referenced with any business goals. Hardly very strategic. All too often, procurement development is not commercial or business-focused. Instead, it is usually about having specialist qualifications. If the business does embark on some training program for procurement, it is usually focused on cost pressures.
To avoid being away from the office, courses are often delivered through impersonal e-learning. With poor retention and difficulty in applying the learning in the business, e-learning is not a substitute for sharing experiences face-to-face at training workshops.
Furthermore, the majority of courses are not delivered by trainers with real-world experience. They are teachers rather than practicing buyers. Over time, procurement has become fractured with multiple takes on best practice models.

Seeking alignment
Procurement objectives must always be aligned to the business. Unfortunately, procurement has been promoting itself, missing the importance of the business needs. This has resulted in procurement teams and professionals being bypassed on major spend decisions and on out-sourcing projects.
Almost 50% of all the major spend decisions are made outside of the procurement function. Especially in IT, out-sourcing and off-shoring functional budgets are hard fought. So when budgets are secured, the business becomes protective and considers this as their own money.
While I believe you should spend the company’s money as if it were your own, spending a company’s money professionally is very different to going shopping with it – and doing this without procurement is asking for trouble. Business departments can also become very defensive about “their functions spend”. Phrases I hear include “it’s different here” or “what do you know about what my function does?”. Procurement’s standard approach does not therefore fit every spend category. One reason why businesses lack trust in us is because we have been too accommodating with non-procurement leaders joining our profession from outside. This is unique to procurement. Finance and legal are more restrictive about who joins them. This may explain why we have so many different versions of procurement.
Diversity can be good, however it can also weaken our message and the value of our proposition.
To confront non-controlled strategic spend, procurement professionals typically try a number of tactics: We might ask senior leaders to instruct the business to behave (never good for our credibility); or we win them over by charm and reason. If procurement lacks the breadth of skills to find a voice, then internal business stakeholders lock out procurement. We then become the victim who blames the business for not involving us.

The threat of external consultants
Failing to unlock these spend categories opens the way for external consultants to make a breakthrough with the business. When the consultants arrive the business and the internal team are an afterthought as they focus on reaping the benefits.
External consultants always benefit from having savings delivered. This does not engender trust and gives people a reason to disengage. External consultants can often have an effect of leaving debris in their wake and driving a wedge between procurement and the rest of the business. This makes for an unsatisfactory and unsustainable engagement model. Of course, none of this is especially helped when procurement has a savings target. This causes friction within the business, with disagreements around who gets the credit.
It is no secret that people enjoy spending money. And a business is no exception.
Procurement teams are allowed to manage low-risk low-value items. However, no other function experiences an exclusion zone on the big ticket items in the way that procurement does.

The way forward
Academic qualifications are useful and should be taught. However, strong governance and structure are essential as procurement in isolation will not work. A single process will not work. Short-term targets will not work. Procurement must engage with the broader business. This requires additional skills to traditional procurement capabilities including business and relationship soft skills. A lack of a training strategy is a key reason why procurement is still not a core business function.
By acquiring new skills this helps procurement to articulate risk and opportunity and talk the same language as the rest of the business. We can then define what is fit for purpose. This strengthens our case for a seat at the boardroom table when the really important spend decisions are being made. Crucially, when we do get our moment, we must explain our message in business words, and not “procurement speak”.

This is a lightly edited version, reprinted with permission on Bespoke Procurement Bulletin. Stephen Wills is the founder and Managing Director of Procurement Central

www.bespoke.co.za BESPOKE.png