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Strategic Skills for Procurement

May 12, 2011

IACCM‘s Vice-President of learning and development, Paul Mallory, was featured on a program run by the Strategic Sourcing and Procurement Group. Along with Charles Dominick, CEO of Next Level Purchasing, Paul was discussing ‘Strategic Skills for Procurement Professionals’.

It is interesting that on the one level, traditional procurement professional bodies suggest that ‘Procurement is ready to rise to the top table’. Yet at the same time, much of the professional press suggests there is a need for fundamental changes in the skill, knowledge and role of today’s practitioners. This program sought to make sense of the needs of business and what that means to the procurement professional.

Paul highlighted how increasing business complexity, driven by factors that include globalization and outsourcing, means that procurement professionals need to increase skills in selecting and managing the right relationships, managing contracts as company assets, and safeguarding economic value through an end-to-end process. He observed that (in IACCM’s experience), companies and public sector bodies are investing in these skills, even in the recession, because they see them as key to successful future business outcomes – not only with regard to cost, but also related to innovation and flexibility.

Improving skills in contract and relationship management are especially key to these outcomes. ‘Procurement professionals need to become more rounded business people, rather than merely discount-chasers’, was one observation during the interview. Although rather severe (and certainly not reflective of all procurement practitioners), the comment does reflect a view widely held by other business functions. This raises the question of whether it is more risky to try doing things differently, or to keep doing things the way they’ve been done for years? Certainly when it comes to the image of the procurement team, or individual professionals, it is very risky to be seen as resisting or failing to adapt to change.

There are many examples to draw from. Increased awareness of culture and behavior and their influence on results is one. Enabling – and placing value – on flexibility and change is another. The pressure to use more SMEs as a source of cost reduction or innovation requires an adjustment of approach (e.g. evaluation criteria and assessment will need modification; SMEs don’t have the same infrastructure to demonstrate documented procedures, ISO accreditations, etc). Driving agility and innovation, the ability of the business to rapidly adapt to altered business conditions, has become fundamental in a world where so much depends on the supply chain. Ultimately, the procurement and supply management process must become a source of competitive advantage – and in most places, it is far from achieving that goal.

As we heard at the IACCM European conference this week, today’s procurement groups need to recognize that category management, compliance and cost reduction are not going to offer the value needed for business success. These are just the basics from which the real contribution must be built. They must be integrated with the business acumen and knowledge generated by market and business intelligence and drawing on enhanced commercial and relationship management skills. And these are not merely susidiary areas of competence, to be bolted on to the existing purchasing curriculum. They represent core areas of capability, without which the role of procurement will steadily reduce.

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