Overcoming Self Destruction In Procurement

0

Author: 

Introduction

You know, it’s the easiest thing in the world to sit on the side and complain interminably about the game, blaming everyone from self-opinionated players to idle and bumptious coaches. It doesn’t matter what sport, the nay-sayers and luddites are always there in droves, and when our team is losing, it’s always louder and more intense than at any other time.

In Business, it’s the same, constant whining and complaining (and I’ll have to be honest and admit to some of that), but to fix the problem, you have to take ownership and have a very clear plan. We now need to build and create a new paradigm, a lasting structure and discipline that can clearly define the qualifications and performance levels in procurement, research and identify our exemplars and great procurement Leaders, and create a discipline that, in Australia and New Zealand, is a valued part of the international Procurement community.

Procurement , Are We Self Destructing – Yes!

My views on “Procurement Are We Self-destructing” in my article earlier this weekgenerated more interest than would a drunk elephant climbing a tree in Perth’s Central Park at Lunch time! It’s great to see the level of concern, and strangely enough willingness from all the comments, on how we can make real improvements in our roles. So here goes, this is one simple view on how we can rebuild and create something comprehensive and enduring for Procurement.

But first let me appease the Academics – I know that academia does not like us using the term ‘discipline’, in fact their view would probably be that Procurement is a sub-set of Operations Management and that it is inappropriate to call Procurement a discipline. Too bad – for the sake of simplicity in this article, I will use the word discipline to accurately represent the boundaries in which we as Procurement professionals operate, the knowledge that we have, and the activities that we undertake.

Let’s face it – The Procurement Goal is Gargantuan!

Rebuilding our discipline is a strategic Procurement Transformation activity in its own right. However before we start rebuilding the lofty walls of Jericho, we need a very clear and aligned vision. My grand but altruistic vision is to establish Procurement as a leading contributor to Australian and New Zealand business environments making us more competitive, efficient and creators of business value! Phew, that sounds awesome.

But this actually means overcoming our widely fractured community, working together on a common purpose, and agreeing on common goals and objectives. We need to put this into very clear perspective, our economy was worth AUD$1.69 Trillion as at 30 June 2017. In 2030, the economy is forecast to increase by a further AUD$2.2 Trillion to AUD $3.89 Trillion!.

Let’s elevate this discussion a million fold. In our tiny little purchasing worlds, we regularly and superciliously proffer to our CEO just how much Procurement controls in the Company, and let’s be conservative at between 50 to 75%. Following which we sit on our oversize haunches and expect a fatherly pat on the head with congratulatory treats to get on with the job. This is childish nonsense.

In contrast let’s think of the Procurement spend in terms of the total value of the economy – the result in 2017 could be a Procurement Spend in Australia of somewhere between AUD $845 billion to AUD $1.27 trillion! I suspect that most Procurement practitioners have never even thought about the incredible size of our involvement in the economy.

Now if we apply an economic waste factor of say a lowly 10% because our discipline is, in my view, broadly fractured and our processes are often inefficient, the economic waste to Australia and new Zealand could be as high as AUD $169 billion! Now as a Government, as a business environment, as a community why is this not attracting a lot more attention than my drunk elephant friend!

Our Time is Up

We either stand-up and take ownership as a single team, or we continue along our wanton path of self-loathing and destruction. These are colossal numbers in any language, whether academic, economic, financial or Procurement. Realistically the solution is not actually that difficult. We need to make up and hold hands around a very large camp fire as a Procurement community. We need to all agree a common path forward and stick to the plan.

A simple and Unassuming Man’s Plan for Success

It’s not as if I haven’t been thinking about this for a while, but of course I have. Primarily with a few raucous friends over a cloudy natural Cider or five. Actually on more than one occasion down on South Bank in Melbourne on a balmy summer’s evening. But I digress, here is my possible route forward to a new, future focussed and value adding Procurement Transformation. Lets:

1.      Actually hold a joint Procurement meeting somewhere (where there is Cider) to discuss the many and diverse options, include many different organisations and Procurement communities, make it open, honest and focussed. Most important, we would need to make sure that the outcome is a firm plan.

2.      Engage with Government as soon as practicable – let them know what we know. Let them know of the impact on the economy and our competitiveness. Make them understand the need for Government involvement and support for Procurement so that we can deliver improvements and increasing capability development for our government agencies and our companies.

3.      With Government funding and support, form a National Procurement Council that is wholly funded by the Government. There are plenty of examples where this can occur whether funded by the Australian Research Council or the Federal Department of Innovation, Industry and Science. The role of the Procurement Council would be to:

a.      further the development of the Procurement discipline in Australia and New Zealand;

b.     undertake key research into the effect of Procurement activities in Australia and internationally, including the positive as well as negative effects of Best Cost County Sourcing (BCCS);

c.      contribute to the reduction of Procurement economic waste by implementing new strategic procurement initiatives, whether qualifications, new processes, investments in IT or positive support in various legislation;

d.     contribute to the increasing competitiveness of our businesses through best in class procurement activities and guidelines;

e.     support the development of an agreed national framework for Procurement;

f.       provide Ministerial guidance and advice on both Government as well as Private business Procurement issues;

g.      set goals and objectives for Procurement in Australia and New Zealand report on these to Government so that funding continues well into the future;

h.     educate our businesses on the importance of Procurement to our economy; and

i.        generate and encourage innovative activities through funding and sponsorship for projects that will give our businesses Procurement advantage.

4.      The Procurement Council should include our various fractious friends in each of the procurement organisations, selected academics, a few very senior and properly qualified Chief Procurement Officers, the Chamber of Commerce, and interested Government Departments – who will of course provide the funding.

5.      Engage with the Federal Tertiary Education Quality and Standards Authority or appropriate federal Government agency to agree what a real and professional Procurement qualification should look like. The role of the TEQSA is to set, approve and control the standards for professional skills and qualifications. It’s about time we properly elevated our Procurement Skills to the C-level! Taking our Procurement qualifications to a National standard and ensuring there is clarity for all supply associations, bodies or universities is essential. I suspect that right about now, my colleagues in CIPSA are already taking the moral but slippery high ground and claiming this as of right, because of some misguided global CIPS approach. But let’s face it, this is Australia, you have had your chance, your time is up. We need to elevate this to a higher level and create a new standardised educational framework that is available to all.

6.      Under the Educational framework Encourage competition between our various Procurement organisations such as our Universities, PASA, CIPSA, the Source, Procurement Leaders, and others, all within the agreed educational framework.

7.      Encourage only one National Procurement Conference sponsored by our Procurement Council, where our various competing friends can actively participate fairly. And of course, let’s stop copying the entertainment industry by each separate body giving out various self- adulatory awards for the same thing – and even though I was the recipient on one such award in 2016, I would definitely like to see only one such event! One of the positive by-products of such an approach would be our suppliers and conference sponsors coming back to the table as they would also see greater value in a single event.

8.      Finally, let’s start talking about one discipline and about working together. We are all in the same game, lets act like a professional sports team that always wins, let’s align our procurement goals, let’s build real Procurement skills, lets exhibit real leadership at all levels, and let’s make sure that we focus on winning the big prize, delivering value to our Companies and to our Country.

Well team, that’s my simple approach to rebuilding our Discipline. Let’s stop taking about procurement transformation, lets stop the waste and inefficiency, and let’s make it so. Who is in?

  • Trevor Cameron is CPO at Thyssen Krupp. 

 

  • Have you heard about PASA CPO Summit in March? ‘Future Proofing You’ will be held on 13 & 14th March 2018 in Sydney. 

 

 

About Author

Leave A Reply