I heard a story about a (hypothetical) board meeting occurring in the early 2000’s where the Chief Marketing Officer (CMO) was claiming (something along the lines of) ’for every dollar you spend with me, I can generate ten dollars of new sales‘, the Chief Procurement Officer (CPO) – if they actually had one on the board back then – followed with the statement ‘for every dollar you spend with me, I can save you five dollars’! Needless to say the investment went to marketing. Fast forward to 2008, with global financial meltdown and the board are meeting again. The CMO presents his case ‘for every dollar you spend with me, I can keep a customer spending a dollar with us’, followed by a beaming CPO realising his time has come ‘remember me?’ It’s pretty clear that Procurement’s day came, gained the investment and delivered the savings. But now the global recession is over and growth (revenue) is back at the top of the agenda, has Procurement done enough to retain its influence at the top table? Introduction by Chris Arnold, Director of Annona Search.
Thrust into the limelight during the global recession, the profile of the Procurement function has dramatically improved. Fundamental-to-survival savings have been delivered and the level of the Chief Procurement Officer has risen, becoming a trusted and integral player at the top table of forward thinking businesses. Procurement, having proven the ability to deliver savings, is now looking to go further towards unlocking value. On the 2016 agenda for these companies is reorganising procurement to be more effectively aligned with the business and its operations. While category management in many cases has successfully delivered a strategic procurement organisation, with self-justifying savings, this blueprint is now fairly standard and addresses typical areas of spend in any organisation. I expect to see advanced procurement functions looking to support the businesses in the direction they are going. (E.g. new geographies, markets, product/service areas, and innovation).
But this is not the case everywhere. The reality is that some Procurement executives have moved quicker to address supply chain efficiency than others. I still see many businesses (where the top Procurement position is a department head and not a real executive) bogged down by:
- Transactional purchasing activities
- Negotiating low value contracts
- Struggling to deliver the Procurement transformation
- Perception as a bottleneck to productivity rather than a catalyst
Communicating with top executives is a specialist skill, a bit like being inspirational to a large group of people, and the traditional purchasing career path has not been producing these qualities in abundance. I like the idea that to develop credibility and empathy with executives the procurement professional should step out of the function into a key stakeholder’s role while on the journey towards CPO.
For those organisations still going through the transformation to strategic procurement many are still finding it hard to attract talent. The demand for strategic procurement talent massively outstrips supply and arguably it’s a more challenging market today. Procurement jobs internally have evolved such that most jobholders now have strategic responsibilities and more impressive job titles, making everyone more attractive at first sight and more expensive to recruit. The outcome is often hiring like for like when fishing in the same pond and paying for the pleasure. Results may improve by opening up opportunities to colleagues in other departments, who may be able to empathise better with the internal customer, or looking into supply markets’ product or sales managers; they know the market and just have to move round to the buy-side of the table.
Talent attraction and retention has been a topic on the agenda for Procurement conferences and seminars year after year, so what are companies doing to overcome it? In the recently published, The Times Top 100 Graduate Schemes for 2015, there were only 16 offering a placement in Purchasing. Are we surprised that few graduates come into the career path when these influential schemes offer very little access?
Is talent an issue in your Procurement organisation? We intend to go further to address this issue over the course of 2016 and would welcome your contribution.
If you found this blog interesting, what topics would you like to read about next? What angle do you take on Procurement in 2016? Feel free to get in contact with our Annona Search team here http://annonasearch.com/contact/
Written by Teodora Ivanova, Research Associate with Annona Search.