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Are contracts and procurement staff ‘the squeezed middle’?

August 21, 2013

A recent article in The Economist is just the latest to illustrate the extent of job erosion for ‘skilled labor’, with growth occurring for executive and professional management and for low-end service and support tasks.

Time and again I hear from top management and academics about the need for increased commercial competence and judgment and the ‘skill deficit’ they face in coping with today’s challenging markets. They see groups like Procurement and Contract Management as transactionally-oriented, coping with work at an operational level, but contributing little to strategic or market capability.  In that sense, they are ‘skilled labor’ – and their role is therefore under threat of being steadily squeezed.

“People, people, people – those are the big problems,” observed one academic yesterday. “We need to re-skill existing staff”. He was speaking in the context of Procurement and brushed aside any suggestion that the issue is due to the narrow scope of Procurement role or the constraints imposed by the current focus on savings. This view was reinforced during another conversation, with the head of HR at one of the largest aerospace and defense manufacturers: “It isn’t the role or measurements that constrain them – it is their unwillingness to expand their thinking and contribution”.

Fundamental to the survival of any skill group is its readiness to adapt and change. The transactional and operational work performed by purchasing and contract management groups is steadily being replaced by automation or by service and support centers. The value work is moving up the scale, to people who can think strategically, who are excited by the power of analytics, of concepts such as holism, who want to drive and influence policies, practices and process and to empower the organization through their depth of knowledge. This demands fresh thinking and a readiness to challenge existing knowledge and methods (characteristics which, based on IACCM data, are possessed by no more than 15 – 20% of the existing expert community).

The role being demanded by top management is very different and many find it threatening. Indeed, as I commented to the academic, why would he expect that many people can make this transition in skills? They chose a job that requires different competencies from the requirements of today, so perhaps it is a case of the wrong people with the wrong aptitudes – and therefore in many cases unable to escape ‘the squeeze’.

 

2 Comments
  1. Reblogged this on thecontractpuzzle and commented:

    Is classic category management going to be outsourced in the future as the value work is moving up the scale with a more strategic approach? Will procurement in the future be less categorization and more sourcing, and what about capabilities – what is needed while we wait?

  2. It’s difficult to understand the gap between what you say management perceives, and what they want, when jobs for purchasing and contract management almost always require a college degree and experience. Yet, time and time again, those same companies that say the WANT expertise in the area allow their engineers and operations employees to execute contracts and purchase without an approved purchase order.

    Purchasing and contracts professionals are, then, in a squeeze between what management says they want and what they’ll allow these professionals to do.

    Further, there’s a gap between strategic and tactical thinking. Companies routinely implement expensive ERP and MRP software without considering what purchasing, inventory management, or the contracts department wants and needs. SAP (without the forecasting module) in a situation where purchasing must also manage inventory! Of course, the accountants and finance group specify what’s to be purchased. Tough to be strategic when the tactical points are covered.

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