The disappearing world of Procurement

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Author: Tim Cummins

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.

This article was originally published on the IACCM website.

Click here to read Nigel Wardropper’s comment on this article.
You can leave your own comment at the bottom of this page.

Tim Cummins
In his role as CEO of IACCM, Tim works with leading corporations, public and academic bodies, supporting executive awareness and understanding of the role that procurement, contracting and relationship management increasingly play in 21st century business performance and public policy.

Prior to IACCM, Tim’s business career included executive roles at IBM and a period on the Chairman’s staff, leading studies on the impacts of globalization and the re-engineering of IBM’s global contracting processes. His earlier career involved the banking, automotive and aerospace industries, initially in Corporate Finance and later in commercial and business development. He led negotiations up to $1.5 billion in value and his work has taken him to over 40 countries.

Tim’s writing is extensively published and he has acted in an advisory capacity to government bodies in countries that include the US, UK, Australia, Canada and Japan, as well as regular briefings to senior managers at many of the world’s largest companies.

About Author

Procurement and Supply Australasia (PASA) is the leading provider of information and education to procurement and supply professionals throughout Australia and New Zealand. PASA supports the largest community of engaged procurement stakeholders in the region, through its renowned series of events, publications, awards, plus various community and network building activities. PASA is a trading name of BTTB Marketing, for many years recognised as the leading producer of conferences and events for the procurement profession in Australia and New Zealand. Whether producing under the BTTB, CIPSA Conferences or now PASA brands over the last ten years, our events have consistently led the market in terms of both educational and networking opportunities.

5 Comments

  1. “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.”

    I am happy to put my head above the parapet and say that I welcome any conversation that is focused upon advancing the cause of more professional behaviour in and around the buyer/seller interface. Time to rise up?

    Time to speak up!

  2. Mark Richards on

    Tim’s comment that traditional approach of procurement professionals is “making them masters of process, but disconnecting them from meaningful relationships with other business functions or suppliers” rings so true.

    Yet some procurement leaders and teams grow beyond this. There are many examples of excellence in procurement leading to top roles for individuals, even CEO is within reach.

    The challenge is for us to lift our game individually. We can hang out with our procurement buddies and complain about not having a seat at the top table. Or we can get out, engage with the business, find out what it wants and deliver. In other words, engineer our processes to fit the business rather than attempt the reverse.

    Time to engage with the business.

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  4. I have seen the procurement business from two sides. That of the buyer and now that of the leader of a consortium of 60 suppliers. Both have their own problems, opportunities and challenges. As a buyer for a large Power Gen OEM, at times, I was faced with deciding between the terrible three: price, quality and delivery. Only once did I decide on delivery and it was the biggest mistake of my 40 year career! As fate would have it the product did not conform to quality standards. The cost of the non-conformance was outrageous. Some lessons are hard learned, but never forgot. 10 years later it still stings. Little did I know that lesson would, and does, focus me to take a more discerning eye when choosing who our company represents. Trust is often wanted but seldom earned. The question is, are you willing to pay the price?

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