The disappearing world of Procurement
Too many procurement groups are on a path to nowhere. They are missing the golden opportunities being created by today’s dynamic markets.
That is the conclusion I have to draw from the many conversations I have with practitioners, consultants, executive search firms and business executives. In a fast-changing world, the possibilities for growth are numerous. But in many cases, procurement professionals and their leaders are simply ignoring them because they do not fit existing paradigms, or they are too busy to pay attention to the warning signs.
For years, supply chain consultants and professional associations have been hammering on issues like compliance, category management, control – all based on the assumption that commoditization is the route to sustainable savings. This has led procurement into increasing isolation, making them masters of process, but disconnecting them from meaningful relationships with other business functions or suppliers. Indeed, many seem to glory in this isolation, feeling that it somehow confirms their objectivity and superiority as moral guardians of the business. They talk about key issues such as commercial skills and then delude themselves into thinking they are masters of these skills.
In reality, nothing could be further from the truth. Suppliers continue to see procurement as ‘the enemy’. Internal functions see them as an obstacle to good, balanced decisions. And markets are adjusting, to move beyond the pernicious effects of modern procurement practices. Suppliers have consolidated, eliminating competition in many industries. They are moving away from products towards services and solutions. They are shifting from unit prices to payment for results. These – and many other trends – are transforming the world of supply management and calling for skills that support integration, collaboration, overseeing outcomes and exercising judgment – attributes that are largely alien to the world that procurement leaders have created.
One would hope that professional leadership organizations would be assisting their members to change, providing a vision for the future. But instead, they often seem wedded to the past, calling for official status as ‘Licensed procurers’ or promoting even more draconian steps that would drive ‘savings’ or simply proclaiming the illusion that it’s only a matter of time before they ascend to the top table.
As enterprises disaggregate, needing ever more flexible and creative supply networks, this should be a golden age for those charged with selecting, forming and managing trading relationships. But as with every craft or trade of the past, relevance depends on the readiness to adapt. Right now, most procurement organizations are following a path that leads to more and more attrition as automation fulfills the roles that they perform and others step into the shoes they could be filling.
Those with vision are grasping that the future lies in the strength of relationships, in research and innovation, in creative ideas and insights – the attributes that machines find hard to replicate. It’s a world that excites IACCM and its members; its a world we must embrace, rather than retreat into the comfort of the past or find excuses to avoid.
If you are in Procurement, it’s time to rise up, to demand more, to assert your abilities and potential. The function is in desperate need of true leaders who act as drivers of change and creators of value. But to do that, you must challenge the status quo, the current mantras of control and compliance, and instead become enablers of transformation in trading relationships.