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Procurement – it’s time for a re-birth

February 1, 2017

There are growing voices that predict the death of Procurement. Faced by exciting new technologies, plus the opportunity to dramatically expand outsourcing (for example to an increasingly rampant company such as Amazon), such predictions are easy to understand. But are they right?

There can be little question that the relatively mundane, repetitive jobs in today’s Procurement functions will disappear. Indeed, that extends to many jobs that SHOULD be mundane and repetitive and are only ‘complex’ because we choose to make them so (and it should be noted, this is an issue that is endemic to business activity, in no way specific to Procurement). Those jobs lie at the heart of current activity – things like managing the RFx process, supplier selection, negotiation and award, performance management and compliance.

But there is much that survives and – more important – much that will be enabled because of the changes going on around us. Elimination of the ‘core’ work of Procurement frees the function to move into areas of real value-add, tackling the issues that are limiting business performance and preventing creative supply relationships. Increasingly, Procurement needs to buy relationships, not things.

IACCM research has clearly shown where real value opportunities lie – and they are not at the core of what Procurement does today. Suppliers are fundamental to business success, yet are often treated as if they are hostile aliens. Distrust generates anti-behaviors that in turn justify the distrust. A narrow focus on functional goals can often lead to the wrong requirements, the wrong incentives and, sadly, the wrong supplier. And once appointed, that supplier is passed on to the business, where lack of skills, ownership and discipline combine to undermine results.

Business sophistication is growing, driven by new network management tools that are starting to span organizational boundaries. Supplier relationships are starting to facilitate more adaptive, agile methods of working. Risk management is becoming a shared and collaborative activity, operating to the mutual interest of the parties. Contracts are adapting and shifting to tools for shared understanding, communication and operational control. New capabilities are being fashioned through creative supply networks and partnerships. All these and more are the areas that cry out for leadership and expertise – in many organizations a void, waiting for someone to step in and take ownership.

That, surely, is where world-class Procurement groups are headed. Yes, it demands fresh skills. Yes, it demands new positioning. Yes, it requires some levels of executive support and investment. But in my experience, the executive doors are open; the problem is how few are stepping through them.

If Procurement dies, then it will be through the neglect of its own professional leadership and a failure of imagination. At IACCM, we are committed not to burials, but to a healthy and inspiring future. And we are confident that, together with our members, we understand the path to follow.

One Comment
  1. John Jorgensen permalink

    Does anyone have a great example of a ‘buying process’ that was automated and led to a successful long term relationship, that could see the risks through the functional gaps, lead functional teams, challenge assumptions and due diligence and got to the point of the deal, not just the deal itself?

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