There’s a lot going on. The changing and challenging times we currently face are probably greater than they’ve ever been. What is the implication for procurement? What do we need to keep abreast of and continually work on?
Duncan Brock, Director of the Chartered Institute of Procurement and Supply, offered his insights during his opening address at the SmartProcurement World Gauteng conference in September.
Protectionism and the closing of borders
Donald Trump may well be a catalyst for this round of protectionism with his made-in-America theme, but localisation and the need to drive manufacturing and services in our own economies is happening everywhere. It is a challenge for procurement: where can you source from and where do you need to be based to get the right suppliers?
It is a headache that Brexit is inflicting on UK procurement.
“Procurement professionals are waiting to see what Brexit’s implications will be on tariffs, customs duties and availability of labour. It dramatically affects how we will continue to source effectively,” said Brock.
Embrace technology’s opportunities
Technology is one area that is the most disruptive, but which also contains the most opportunities for procurement organisations. Around the world, we are grappling to engage with the technologies that surround us, but in a way that enables procurement to be improved.
A great example is e-procurement, said Brock. “e-Procurement enables everyone in an organisation to be buyers themselves, but within guidelines, within structure. If everybody is a buyer, you want them to buy things in a certain way, you want to channel them to buy from the right contracts, at the right time and in the right way. E-procurement helps them to be effective buyers.”
Less control-over-spend, more trusted-advisor
According to Brock, a great way of thinking about automation is that procurement’s role is elevated where artificial intelligent meets emotional intelligence.
If we can get technology working for us, then procurement can spend their time looking at how to apply it. “I can use my emotional intelligence to engage properly with my stakeholders, customers and suppliers. I can focus on applying my influencing skills, knowing that the day job is being done effectively.”
This is a significant shift for many people in procurement. It’s quite scary for some, but for others it’s a way to harness technology.
Importantly, it allows procurement to become more of a trusted adviser, rather than a control freak…
“Most procurement people worry about the fact that they don’t have control over spend. Yet, I don’t know of a single organisation where procurement can claim total control over spend,” noted Brock.
The fact is that they need to influence, but they don’t need to control.
If you can turn yourself into a trusted adviser, where you are influencing, guiding and shaping – all the while knowing that the control is being done effectively, that the standards and processes are right – then you can advise people on how to do things well, rather than spend your time fighting them for control.
“This is quite a big shift for everyone involved and is pushing the boundaries of the profession,” said Brock.
Procurement is becoming involved in more areas of the business than ever before. “But we can’t do it ourselves, which means we must be much more open to cross-functional working, working with other disciplines and engaging with other institutes’ experts.”
Stop blocking innovation
Everyone, across their supply base, seeks innovation from their suppliers. But the challenge is that you don’t know what innovation looks like. You want suppliers to come forward with innovative ideas, but if you talk to suppliers they often say, “I’ve provided you with ideas, but they went nowhere” or “I gave you a great solution, but you weren’t able to take it forward and implement it.”
According to Brock, the issue with innovation does not lie in the supply market. “There is a huge amount of innovation, particularly in SMEs, new companies and start-ups. The challenge is internal, to bring that innovation to life.”
“So many innovative ideas get lost, get dropped. If we could only bring them to life in our organisations then we could begin to gain the value of the innovation that sits in the supplier base. But we need to change our internal processes to be able to capture this.”
“I have experience working in an innovation forum for one of my previous employers, where supplier ideas came in, were evaluated by a cross-functional team, taken forward and implemented. It was led by procurement, not by engineering, nor by finance. Procurement took the lead to drive innovation forward in that organisation. I don’t see organisations with anything similar today.”
Be an agent of change and take the lead on burning platforms
If you are good in the procurement world, then you know how to implement projects, know how to manage change, know how to influence people around you – more so than other disciplines and functions across the business, said Brock.
“But we need to step forward, take ownership of some of those big initiatives and say, ‘yes we will take them forward'”.
This will put procurement in a position to take the lead in assisting business to address two burning platforms: supply chain risk and ethical supply.
“The statistics around ethical supply are frightening: bribery, corruption, child labour, work-related accidents. It is an area that needs to be addressed and procurement should take ownership of tackling the issues of ethical supply, down through your supply chains.”
But we still need to deliver on cost
“Delivering cost reductions and value for money, whether in the public or private sector, is fundamental to what we do – but procurement needs to be fast, agile and move forward at a pace, which is often something that procurement organisations are not very good at. We love to slow things down, get control, get our processes in place. But the business is moving faster around us, so being speedy and agile is important.”
Do you know what to do, how to do it and how to implement it?
Probably not. So, focus on building your skills, building your capabilities.