The Procurement Value Proposition: The Rise of Supply Management – Chapter 6

Chapter 6: It’s all About People: Talent Acquisition and Retention

 

Overview

In Chapter 5 we looked at how and why the game plan for most businesses remains fairly conservative in spite of the seismic shifts we have seen. Many are revising their perspective on the rapidly changing business world to cultivate their understanding of the emerging issues and are developing strategies to take account of the inescapable changes that every business services function will have to make.

Central to this is the focus on the knowledge needs and priorities for those working in the procurement function. Consequently, the pressure on procurement to perform is increasing. As businesses turn their attention from compliance to growth and innovation, businesses must focus too on developing their strategy to enhance the commercial acumen and professional capability of their procurement people, beyond the skill sets traditionally required in their roles (as discussed in Chapter 5).

Modern business is being defined by ‘ideas’-based companies and ‘knowledge intensive’ businesses with their significance determined by innovation and agility. In order for us to identify and recommend good practice for procurement teams, we need to know what happens in business, why it happens and what works in these commercial environments.

The key issues

From a business perspective procurement‘s evolution has increased its importance enormously. Consequently, to meet the new demands of business – be it as an embedded procurement function or, more importantly, a fully ‘commercial’ arm of the businesses – several key issues have surfaced, as set out below.

Skills and abilities

Perhaps the chief concern of business and procurement leaders today relates to the scarcity of talented people in the field. Real or imagined, the perceived lack of knowledge and understanding here relates to general business acumen as well as knowledge of specific markets and sectors:

  • There is a particular focus on the need to develop the ‘social’ (soft) skills required in business and particularly those associated with relationship management, such as communication, collaboration, co-dependence and influencing. So strong is this message that it warrants the top spot on the bill.

  • There are specific skill requirements highlighted too, such as risk ‘gurus’. There is also a great deal of debate regarding the shape of or the profile of the modern skill set – typically about depth and breadth of knowledge. Commercial skills feature highly, as do a need for people to be more visionary, flexible, agile and resilient.

  • Finally there is a heavy emphasis on a need for procurement people to have more ‘scientific’ skills sets. There is a real and immediate need for people with the ability to handle and analyse data. These people have strong quantitative fluency and are competent in developing and deriving solutions from data sets.

Modern procurement professionals today need to be expert, with a deep knowledge of their industry, sector, the geographies they operate in as well as the products and services they are dealing with.

Organizational change

This need stems from the considerable change that business has gone through and the development of new business models and formats. Some businesses still need to be convinced of the worth of a total value outlook, as opposed to one centred on cost. The total value concept is a more holistic approach; people development within organizations is clearly an ongoing process and necessary for all, from the most senior of senior management to front-line staff. The organizational changes that business requires will only come about through (professional) lifelong learning.

Some of the evolution in procurement is a consequence of the increased use of technology and, as has already been alluded, how the more tactical aspects of procurement operations are increasingly outsourced to third-party providers. Many businesses are now focusing on exactly what can and cannot be outsourced in the future and how this will affect their operations and their staffing needs. Increasingly businesses will need to address the question of what an ‘appropriate’ procurement organization looks like. Will it be an in-house service, a loose network or a tight function within the business? In addressing this, businesses will need to decide whether the procurement and supply management function will be embedded in other parts of the business as a fully integrated part of them, or remain stand-alone.

Increasingly we are seeing procurement teams that are smaller, value-adding and with a broader remit. They deal with ‘externalities’ – relationships; with many different sources and work to the boundaries of their territory. They do this by being fully integrated inside the organization, with cross-functional accountability and governance for supply chain management, but jointly owned with other business functions. They will have the capability to manage relationships with increasingly dominant outsourced providers. Finally they will need agility, resilience and vision, which will be the prerequisites for the modern/future professional procurement team. These will be solutions that are driven, versatile and with a broad knowledge base.

Relationships

Supplier relationship management (SRM) is a perennial issue for procurement – and rightly so. Supply assurance has always been the most critical role it plays. So to operate in this space procurement people must master collaboration, co-dependence, interdependence and the changes in the balance of power, be it between the buyer and the supplier or other third-party organizations. Relationships are key and form a large part of what the value procurement delivers.

Collaboration is the new way. The old adversarial posture of procurement is as outmoded as it is inappropriate. There is a new challenge for procurement – to become an intelligent customer, the buyer of choice.

Risk

Awareness of risk and ‘whole supply chain insight’ are or should be the bread-and-butter of procurementThe notion of risk managers with ‘guruesque’ insight to the supply network with a well-developed understanding of both the opportunity and threat presented by risk scenarios must become de rigeur.

Commercial focus

There is no doubt that the level of sophistication in procurement has developed since the mid 1980s. Nowhere is this more apparent than the strong commercial focus anticipated by all organizations from their procurement and supply management professionals.

As the strategic scope of procurement broadens and its capabilities are increasingly recognized within organizations it will have an increasingly financial (commercial) focus. The management of the legal/contracting base to affect consortia and greater interdependencies will demand a commercial mindset and mastery of acquisition as well as procurement know-how.

Evidence of this change

There are a plethora of reports by major consultancies, which bolster the requirements set out above. Some of the most recent reports and studies reflect the burgeoning demand for a new breed of procurement professional. These people will be ‘bimodal‘: business savvy as well as tech savvy, they will have a well-developed commercial acumen as well as deep analytical competence.

Recognizing that procurement is not the career backwater it was once considered to be, and capturing the significant strategic and financial value embedded in this function, are two different things. Indeed, to profit from an elevated respect for procurement, businesses may well have to undo decades of bad habits in the recruitment, training and development of their procurement professionals. No longer can businesses afford to place competent but unimaginative people in these jobs. Nor can they afford to ignore their current procurement people by offering them few chances of advancement and neglecting their skills.

Merely hiring good people is not enough if businesses want to build a world-class procurement function. Rather they must make ‘all-star’ appointments – filling their senior procurement jobs with people who can become tomorrow’s business leaders. Managerial talent of this calibre does not develop by accident. Businesses must hone executive abilities by identifying and encouraging promising individuals and providing them with the right opportunities over years, even decades.

The industry recognizes that inevitably programmes will be needed to develop top procurement executives and must be implemented as more and more procurement managers themselves evince a budding sense of optimism about their prospects. In a recent Booz & Company survey of100 CPOs and supply chain management leaders, 66 per cent of respondents said that the CPO will play a larger role in setting business strategy in the next 5–10 years, and 44 per cent of respondents said that activities in the procurement department will be a top priority.[1] The general conviction in the executive suite seems to be that procurement needs to be more strategic – closer to the leadership agenda.

This suggests that although it will continue to be important for the procurement professional to have functional expertise enabling them to get the best deal on what they are buying (as well as to leverage more value from the entire supply base), strategic capabilities, political know-how and leadership talent are increasingly important priorities and fundamental skills for procurement people.

In fact, in the same Booz & Company study, 46 per cent of senior procurement executives believe that strategic understanding and overall business sense will be the most important traits for procurement managers in the future. Meanwhile, two traditional measures of procurementprofessionals’ functional expertise – their ability to manage supplier networks and their understanding of the products or services they are buying – were not rated as the top priority by even 5 per cent of the respondents.

It would seem that the challenge for tomorrow’s procurement officers will be setting the strategic agenda through growth and innovation. Those businesses that are determined to develop a new generation of corporate procurement leaders – while maintaining a competitive supply chain will be the winners. The report suggested that smart businesses do a number of things:

  • recruit from top universities, but also from other functions;

  • revise and expand training;

  • create career paths for your talent.

These are discussed in more detail below.

Recruit from top universities, but also recruit from other functions

The bad news is that, by and large, organizations have not bothered to seek out the best and the brightest for purchasing; most recruiting has historically been internal. The result, of course, is a self-fulfilling prophecy – second-tier candidates could not raise procurement to a strategic competence, and their underperformance seemed to justify the function’s relegation to a supporting role. If procurement is to achieve its promise, companies must seek out top performers to fill these jobs.

The good news is that the level and quality of procurement talent is rising. Responding to the new demand, some top business and industrial management schools have added Procurement and Supply Management to their curriculum.

The need to be able to build strong managers who possess not only strong analytical skills, but also the ‘soft’ skills, is deemed fundamental to the evolution of procurement. In our research for this book, every executive we interviewed mentioned talent as a shortfall facing their organization. Every procurement leader is focused on prioritizing and assessing the skills within their procurement organization on a worldwide basis, to ensure that:

  • people are right-fit for their roles;

  • that there is a plan to up-skill the entire organization;

  • to enable procurement to move from an enabler of cost savings to a strategic partner to the business.

Proactive organizations are taking deliberate steps to upgrade talent, and are spending less time talking about it than taking action. There is also recognition that procurement must first begin by recruiting people who have a strong understanding of business-line context first, and who are then brought into procurement roles fully cognizant of stakeholder challenges. Development paths typically involve several approaches, as noted below:

  • ‘We are leading our organization through a general and individualized self-assessment, and moving towards a model that provides more consultancy types of skills. We are emphasizing a higher level of accountability as we work that into a fabric of consistency and cross-pollination around the business. This is also being emphasized through comprehensiveness in decision processes. When we approach the market or any internal stakeholder, there needs to be a consistent and methodical experience. To ensure this we engage in sourcing review committees, and any project goes before that committee at least twice before it goes before our stakeholders.’

  • ‘Category management breeds an arrogance that allows others to take advantage of it. I prefer generalists who can look at business issues and solve them and move on. Procurement can become bound by its ignorance of business issues. With the right calibre of individual who is more eclectic, procurement should be a shared service of people who move in and move out. But to develop this talent, we need to apprentice smart people, as it is completely dependent on the type of people who move into these roles. I prefer those who are hungry, smart and humble, who are willing to move around.’

  • ‘In the end, procurement success will be defined by the people who can apply a level of proficiency to derive value for the business. The greatest successes I’ve witnessed in our business is where you have people who are embedded in the business and become effectively an integrated consultant to help shape the business strategy from the outset, and not just support it once it has already been solidified. We achieved this by embedding procurement capabilities into the lines of business at every level. Wherever we had the right capability and skill set, there was exponential change and integration with the business. This takes coaching and leadership – and most important of all, forcing people to be accountable for results. Otherwise, they will continue to do what they have always been doing.’

In establishing the type of individual who can operate within procurement, organizations may need to reach out to non-traditional sources of talent to recruit the right people. What worked for ‘red-meat-eating hard-ball negotiators’ 10 years ago may not be the right fit for today’s more consultative form of engagement with internal stakeholders.

An interesting proposition that is evolving is that procurement executives may be pulled from multiple other areas in the organization, based on where they are needed. One area of potential recruitment is from the marketing and business development area. In effect, the same set of skills is prevalent, albeit from a different perspective. In most of the organizations we interviewed, the level of collaboration between procurement and sales is minimal, but represents a huge opportunity. In fact, we propose that both marketing and procurement talent pools can learn skills from one another that are valuable for application in each of their respective areas. The merging of buy-side and sell-side capabilities is one that was adopted by the International Association of Commercial and Contract Management (IACCM), and provides a natural basis for integration.

To some extent, the merging of sales and purchasing roles is a call to prior times, during the growth of the textile industry in North America. During the period, responsibility for the output, quality and style of the cloth produced by the mills was usually the duty of the selling agent. Theselling agent was also responsible for all purchasing decisions, since the grade of cotton purchased was a factor in determining the quality of cloth produced. These selling agents represented a simple and direct interface between market demand and production scheduling. Customer orders were directly transformed into purchase orders for cotton and subsequently into planned production. The types of cloth produced were somewhat limited, however, by the processes available to manufacture them. This degree of standardization within the domestic and international market made the job of the selling agent much easier, as the majority of cloth could be produced on a ‘make-to-stock’ basis.[2]

Revise and expand training

The training required to function effectively as a purchasing officer is much more complex than it was just a few years ago, because it must include both traditional purchasing expertise and broader financial and managerial skills.

Procurement professionals still need such core skills as negotiation techniques, supplier market analysis and cost modelling, but training programmes involving these once-basic skills often require revision as the field of purchasing becomes more advanced and challenging. For example, traditional cost modelling involved little more than short-term analysis of commodities markets to lock in prices over perhaps a three- to 12-month period. But today that is only the beginning. CPOs now must be adept at macroeconomics and have wider corporate finance skills to manage futures, puts and calls, fixed contracts, and other strategies and instruments that are designed to cover purchases over many years. CPOs increasingly need the financial acuity to accurately forecast supplier prices 24 months out or more, so that they can make better decisions about long-term contracts for oil and other commodities, or the raw materials that should be used in their company’s manufacturing processes and products.

In some industries, such as the airline industry, the last few years have demonstrated that the cost management of a key commodity such as fuel can sometimes be the key not just to profitability but also to corporate survival. For example, with long-term hedging of more than 80 per cent of its energy costs, Southwest Airlines avoided the turbulence that many airlines suffered when jet fuel prices nearly tripled between 2002 and 2005.

To help develop the broad areas of expertise that procurement professionals will need to thrive in the new era, businesses should turn to the top business schools to develop and train their managers.

Create career paths for your talent

Ironically, capabilities training carries a greater risk to the team because these bright young things will be equipped with a wide array of skills and more expertise than other purchasing professionals – and so will find it easier than ever to leave for better opportunities.

To prevent such a brain drain and ensure that businesses can capture the full potential of their purchasing talent, it is essential that they offer concrete and compelling career paths for these people. To determine which procurement executives deserve special treatment, HR departments should build into performance appraisals measurements to take account of the new set of skills needed by purchasing managers – this higher degree of financial acumen and finely honed strategic thinking – and procurement people who meet their cost and delivery targets should be rewarded with greater compensation. The greatest accolade would be when the business sees procurement as a training ground for senior positions in the ‘corporation’.

Sceptics will doubtless argue that thinking of well-trained and innovative purchasing managers as indispensable talent assets is a short-term trend, generating at best a modicum of real change before it disappears. However, the rising need and desire for highly skilled purchasing professionals is a somewhat lagging indicator in the long-term trend of the supply side evolution. Since the mid-1980s businesses have become increasingly aware of the pivotal role that supply management plays in corporate success. And yet even as they understood the profound impact of supply management, executives and purchasing professionals alike remain oblivious to procurement‘s unequivocal contribution to the efficiency of the business.

In another recent study carried out by Deloitte, published in late 2013, they argue that by 2020 current operating models will be defunct and they suggest that a ‘new procurement‘ requires a near revolution to operate in the modern business world. They feel that many of today’s fundamentals will stand in the decades to come, such as category sourcing, baseline procurement systems, human resources management, purchasing performance and knowledge management. But the purchasing organization of the future will need far more.

Procurement, Deloitte says, requires a finance-centric orientation if it wishes to engage other business owners, ranging from those responsible for P&Ls to functional roles including legal, IT, HR, marketing, design and manufacturing. The key capability developments for businesses to survive and thrive include core talent. Procurement capability and talent transformation are seen as paramount in preparing for any procurement transformation journey that will be successful.

It goes without saying that top talent requires leadership and enthusiastic stakeholder engagement, and it is these two capabilities that will enable procurement to operate as a peer. Having an honest reckoning over talent is essential. Clearly, one size does not fit all team members, and one of the most important roles for procurement leaders is to embrace diverse skills, capabilities and background – and deploying these people to the appropriate positions.

Today, a good procurement team must be able to engage and interact with constituents across the business. One way to think about procurement skills and expertise is that the type of talent that resides in the highest-end chief financial officer (CFO) and finance organizations today is similar to that which will be required of procurement in the future. Analytical skills and a data-driven orientation will be the table stakes, but will not stand alone in assembling the right team members. Overall, how organizations conceive of talent will transcend just identifying ‘A-players’ at all ranks and levels:

  • Emphasis will shift to the assembly of talent teams; HR and procurement will need their fingers on the pulse of talent in both labour and supply markets. Talent will be looked at individually and globally. Criteria will include not just listed skill sets and capabilities, but past performance, demographic/cultural nuances and preferences. For example, a system may flag a particular candidate for a role not based on a past similar rotation, but a collection of indicators in a profile that suggests success in the desired new role. Leading companies will likely be able to do this externally too – mining candidates from social networks, jobs boards and curriculum vitae items across public sites.

  • CPOs will use multi-tier succession planning as a necessary requirement to create lasting impact past their tenure and that of their reports, especially as they move into more advanced positions running the corporation. In their report Deloitte argue that proactive talent and skills-level strategy and programmes matter at all levels, not just the top. Talent management and skills development require the thoughtful blend of outside talent (ie recruiting) coupled with skills development and procurement rotations internally.

  • HR will collaborate with procurement to jointly assemble their required team; operating as human capital integrators, leveraging both internal and external sources for specific needs, by deploying a proactive, aligned mindset. For procurement‘s overall talent picture, businesses will need to strike a balance of smart, youthful and malleable talent with seasoned and empathetic management. Ultimately, this type of effort requires a fundamental reset of HR’s role in procurement, not in terms of just recruiting talent, but nurturing and growing it as well – and helping to strike a balance of roles and the right expertise at all levels of the procurement function.

Nick Gunn from Hewlett-Packard noted that most people don’t start a 40-year-career thinking they will be working in procurement, but that over the course of a career many, many things can change. How HP engages stakeholders is a critical talent, since procurement at HP is a shared service, and as such their stakeholders are literally their customers in every sense of the word, except that they don’t have a choice to go elsewhere if they don’t like what HP procurement does for them. Procurement sits down with their senior executives to understand their business, and plans accordingly on how they will deliver value. He also talked about the fact that people in procurement need to stay relevant and abreast of current issues, just like doctors who keep up on their journals. He says that 20 years ago HP was hiring ‘red-meat-eating negotiating professionals’, but while cost savings are still important, it is a softer set of skills that underlie the ability to create better relationships with customers.

In a report by KPMG the need to develop capable managers who possess both strong analytical and soft skills is mooted from the outset. The main thrust of their argument is that the development and deployment of ‘soft’ skills is fundamental to the evolution of procurement. Talent is a major issue facing organizations, so much so that every CPO should focus on prioritizing and assessing the skills within their departments globally, evaluating people to role fits, and ensuring that there is a plan to build talent within the function. This is seen by many in the industry as critical to procurement‘s ability to move from being an enabler of cost savings to becoming a strategic partner to the business.

It was noted by KPMG that proactive organizations are already taking deliberate steps to upgrade talent, and are increasingly recognizing that the most effective procurement managers first gain strong understanding of business-line context and then bring knowledge of the stakeholders’ challenges into their procurement roles. Moreover, KPMG say that given today’s need for a more consultative form of engagement with internal stakeholders, an increasing number of procurement organizations are reaching out to non-traditional sources of talent to recruit the right people for them.

By way of a contrast, in a report by the Chartered Institute of Purchasing and Supply (CIPS), 80:20 Vision (published in 2012 to coincide with its 80th anniversary), it was argued that professional skill sets for procurement people need to change. This need to change was heralded by 30 years of change to business models and the business landscape. Globalization coupled with rapid developments in new technologies has meant that the need for the proper management of the supply chain in its entirety is fundamental for all organizations to remain sustainable.

Procurement professionals, CIPS argued, must become experts: respected; influential; persuasive; visionary; strategic; sharp; global; collaborative; executive and commercially focused. Procurement needs to develop a new definition of ‘expert’, where the new supply professionals will know everything about their sphere of interest – the science, economics, law and politics of their supply markets on a global scale.

CIPS also reinforce that the competition for talent will heat up, and while there is considerable opinion regarding the talent pipeline, one thing is sure – there will be intense competition to attract the best and the brightest into the profession and this will increasingly be on their own terms.

[1]Booz & Co (2014) [accessed 11 August 2014] The New CPO, white paper http://www.strategyand.pwc.com/media/file/New_CPO.pdf

[2]Chandler Jr, A D (1977) The Visible Hand: The managerial revolution in American business, Harvard University Press, Cambridge, MA, p58.

Different types of talent are needed for different roles

As noted in the study conducted by Handfield in 2013, there are different types of future procurement capabilities that align with different abilities in the individuals that take on these roles. The key roles identified in this report are shown below and some of them are detailed further in Table 6.1:

  • Internal consultant: ability to connect, listen and deliver business value to internal stakeholders. Building a strong P2P system to drive improved procurement transaction excellence, and driving results that matter to the business.

  • Market intelligence and cost-modelling analytics: deployment of total-cost analytic modelling and cost to serve capabilities, application of analytical cost-modelling approaches for decision support, and building supply market intelligence-data gathering and knowledge dissemination capabilities. Deep knowledge and understanding of macroeconomic forces and ability to relate them to future market movements and forecasts.

  • Financial acumen: knowledge of currency, capital markets and contribution of procurement to P&L and balance sheet. Ability to contribute to CFO and other financial leadership discussions and debates. Ability to build logistics cost models, understand contribution of supplymanagement to capitalization, facility productivity and other key metrics.

  • Risk mitigation: knowledge of different sources of risk, ability to build risk profiles, link recognition of risks to risk mitigation and scenario planning, and understanding how to manage disasters when they occur. Building a business case for risk mitigation planning.

  • Supplier coach: ability to deploy supplier development to drive improvement in high-need categories or regions, especially in emerging countries where local content is required. Becoming a customer of choice, and driving improvement in supplier capabilities. Harnessing supplier innovation and developing solutions to stakeholder requirements.

  • Relationship broker: managing teams in multicultural environments, managing virtual teams, and understanding pros and cons of different organizational models (centralization versus decentralization). Working with global engineering teams and understanding of technical knowledge. Managing outsourced relationships and services. Driving supplier innovation and linking to internal teams.

  • Legal expertise: building relational contracts, understanding legal contractual language, terms and conditions, legal clauses and vernacular. Building good price- and cost-modelling indices for contracting, and managing risks and rewards through improved contract structure. Best practices in ongoing contract management. Managing conflicts that emerge post-contract signing. Dealing with intellectual property (IP) issues when working with suppliers.

  • Talent management: building a pipeline of leadership and supply management expertise, mentoring and leadership development.

 

Table 6.1: Future roles of procurement
 Open table as spreadsheet

Role

1 Ad Hoc

2 Defined

3 Managed

4 Leveraged

5 Optimized

Internal consultant

Small team handles ad hoc requests for transactional work

Quarterly reports generated and reviewed with stakeholders and follow-up

Global team coordinates with stakeholders via defined statements of work (SOWs) and designed templates

Global team and site representation provides local insight and engagement

Global team and co-located teams participate in meetings and are able to anticipate requirements

Market intelligence and cost modelling

Low level of common tools, processes and methodology

Cost models apply publicly traded financial information to create highlevel product models

Dedicated cost model and supplier intelligence databases established with management information (MI) portals, feeds and updates

Dedicated cost modelling, MI analyst and ground-level roles established. All major categories have updated MI feeds

Cost models, MI and global event management is leveraged across thebusiness for application in design, production and marketing decisions

Financial expertise

Secondary data dumps pulled into ppt and shipped to users

Secondary data complements internal SME interviews on as-required basis

Multiple insights pulled using triangulated results, SME insights, ongoing database updates and market indicator reports

Co-located teams collect local supplier insights and complement global team updates and reporting on real-time basis

Co-located teams plus networks of SMEs located within the supply base and other outsourced service providers update market conditions and deep future state insights

Risk mitigator

Financial health measured annually using Dun & Bradstreet sources

Multiple indicators of financial health and operational risk established quarterly

Risk profiles include multiple measures of primary/ secondary operational and financial health check

Risk profiles include primary and secondary measures of tier 1 and 2 supplier risk

Global risk event triggers are monitored in real-time with impacts and mitigation plans in place

 

In terms of the road map to building these capabilities, our research also suggests that an evolution may require stages of maturity evolution, which may change over time. There is a need to be able to execute on what is needed today, even while a vision is kept in mind for building capabilities in the future. Today, procurement is inundated by requests from multiple stakeholders and, in some cases, may be pulled in different directions in the value chain. The roles that procurement is being asked to do may also present competing priorities for attention:

  • traditional role: right part/right place/right time; not historically strategic or career oriented;

  • emerging role: supplier risk management, integration within supply chain;

  • future role: relationship manager, innovator.

As the evolution to the future state unfolds, there is no doubt that the structure of procurement organizations will change in response to broader business imperatives that are shaking organizations globally. For example, one executive noted that procurement may look more like an R&D organization, where there is a separation between a limited number of resources working on the programme side, and supporting business leaders on turning concepts into innovation plans and research. The procurement organization will lead certain commodities and skills into an R&D organization. We may also see procurement move entirely away from the P2P space, which becomes highly automated in an ‘Amazon-like’ interface, and become primarily focused on relationship management, and analytical insight and support. This may evolve into a project-based structure, where programme managers work directly with the business on different product/service cycles, and become integrated team members dedicated to the product.

At any rate, we expect to see a significant evolution occur for procurement by 2024. These insights are intended as a focal point for managers to begin thinking through these ideas and developing them.

Conclusions

To conclude, it is clear that no single blueprint exists for talent acquisition, development and retention. And yet many people have identified the need to find, train and commit to bringing on a new breed of procurement professionals. In this regard Optimum Procurement Group’s recent white paper offered some observations, developed from a round table event where CPOs came together to debate what procurement‘s future role might present, and their thinking on some important new directions that will require investments in talent management and the subsequent development of this talent.[3] According to this white paper, becoming a procurement leader of tomorrow requires focus: a focus on the discernible and tangible benefit that they as procurement leaders will bring to their organization. The outcomes echo much of what is generally being aired by other professional observers and a summation of the next section, regarding what will be required.

Align, execute and deliver

As C-level executives chart the future course of their businesses, they will have several simultaneous objectives:

  • Aligning their strategies with rapidly changing business contexts.

  • Execute those strategies, to ensure their supply chains are sustainable, flexible and responsive through their networks, collaboration and focus.

  • Delivery of procurement‘s new value proposition must be seamless, without operational interruptions or performance slips.

It will be a strategic balancing act and one that requires a strong leadership crossing all lines of business and reporting to the board.

Actively deploy new skill sets – bimodal procurement executives

There is now a universal acceptance of the pivotal role that supply management executives play in the success of businesses. But as business models evolve what does that imply for the executives who manage them? What kind of skill sets and capabilities will be required?

The traditional transactional skills of procurement on which the function was built will change, with increasing importance on people who are culturally aware. They will be collaborative and innovative diligent optimizers with strong leadership skills. Future supply professionals will offer decision makers more choices and alternatives, higher-precision controls and levers to achieve desired outcomes. They will be capable of optimizing global networks of assets and talent – not only their own but also those of partners and customers.

Understand the full extent of sustainability – social, economic and environmental

These responsibilities also extend to environmental stewardship. Perhaps more than any other role, top supply management executives must have an end-to-end understanding of the business, a broad view of external risks and the ability to manage holistically.

Businesses will need people focused on a career in procurement, attracting top graduates away from investment banks, consultancies and law firms by raising the profile of supply management beyond these traditional corporate ‘staples’.

With the benefits of globalization has come increasing supply chain interdependence and a heightened level of volatility and vulnerability that is unlikely to subside. With such a clear mandate for change, supply management executives have an opportunity to re-evaluate current strategies and initiatives and set them in a context that will make talent attraction part of their strategic direction.

Create peace of mind for the board

With the massive global economic shifts we have recently encountered, ‘change or perish’ pronouncements pile up. Supply management has at its disposal the necessary ingredients to make supply chains substantially better connected and more important to current strategic enablers. The CEO’s growing understanding of how critical the function is to the company’s success establishes the challenge and the opportunity to create change and peace of mind from the supply side. To do this they will need to be innovative, focused and collaborative. These skills and abilities need to be transferred through systematic and ongoing training and development programmes, as well as talent-focused recruitment programmes.

In previous chapters we looked at how the changing world order has impacted everything from demographics and consumption levels to a shift in the economic centre of gravity. We have also contemplated how procurement has changed and the different levels of procurement maturity that exist today.

In this chapter we have begun to look at where we can find the people with the qualities required to work in the contemporary business world and why these skills are becoming even more important in the age of technology. In the next chapter we contemplate the people aspects of this change via an examination of issues such as talent and creativity.

[3]Chick, G and Rushton, P (2013) Procurement‘s New Value Proposition to Business, Optimum Procurement Group.

Notes

 

  1. Booz & Co (2014) [accessed 11 August 2014] The New CPO, white paper http://www.strategyand.pwc.com/media/file/New_CPO.pdf

  2. Chandler Jr, A D (1977) The Visible Hand: The managerial revolution in American business, Harvard University Press, Cambridge, MA, p58.

  3. Chick, G and Rushton, P (2013) Procurement‘s New Value Proposition to Business, Optimum Procurement Group.