…we just have to get better at telling the old one – and high-performance, procurement-powered business will be the result
Procurement, often called the Cinderella function, waits for the digital clock to strike midnight. “We must raise the profile of our profession,” said a contributor to SM in 2016. Four minutes to go.
“This is your moment to seize the day.” That was 2017.
Three minutes. 2018.
“Now is the time to create a new value proposition for the function …” Two minutes.
“It’s always about adding value.” 2019.
We’re now one minute away from a digital demise at midnight. That is, unless we take this chance to spell out procurement’s role in a new way. We don’t seem to have done that yet.
Cost savings and added value are still offered as procurement carrots to attract CEO attention. But there’s a limit to what can be achieved. And while there is little credibility in a function seemingly bent on cost-saving itself out of existence, justifying itself by citing other forms of added value gives the impression of a business activity that is not really at the top table but wants to be.
Trending digital technology provides another drum to bang on about procurement’s role. One recent conference speaker said: “Data will drive artificial intelligence to optimise the sourcing process. This is the future of procurement.” Another weighed in with: “Digitising procurement is driving fundamental change: how processes are executed; reducing cost structures and changing operating modes.” But this is automation and is not transformational.
If unchecked, this rhetoric will see procurement practitioners digging ever deeper into their functional burrow while others parade above, more visible and engaging more persuasively with the business world around them. Some future!
The fact of life is that if you are in business you are in procurement. It’s not discretionary. ’Twas ever thus, but accounting conventions and other factors have obscured this fact over the years. The question is, ‘How good can we be at procurement?’ and not, ‘Will you give us more attention?’ Smart companies say their business is about buying things, transforming them, and selling… and needing to excel at all of that to be successful.
The business community needs to hear these messages. One CEO said that the best way to ‘sell’ procurement’s role was not to sell it but instead deliver stellar results which could not be ignored. However, achievements are soon forgotten and the impact of charismatic CPOs lost when they move elsewhere in the C-Suite. So, as well as delivering savings and other benefits, we must transform the climate in which procurement activity takes place.
In this new environment the procurement process and its principles influence the way the whole company deals with its supply markets, with people engaged in different and more productive ways.
Our challenge is to portray procurement not so much as a means of acquiring external resources and making cost savings… but to have it accepted and managed as one of the primary processes for running a business and for achieving strategic objectives.
There are two parallel journeys towards this goal. One follows the road map for achieving results which directly improve company performance. The other is ‘Route 42,’ the way to transform the world view about procurement and to release it from being frozen into the business landscape with its cost-saving image, ‘42’ being a measure of high-performance procurement.
The two journeys create a cross-company, commercially savvy process, which makes both immediate and strategic impact and is as vital as in-house operations and sales. The great news is that people are empowered to realise their full potential in the process.
We need to fashion a new agenda rather than seek more space on the existing one. Let’s be certain in our own minds about procurement’s role in business and let that sound ring out as the digital clock strikes midnight.
Dr Richard Russill FCIPS is author of just-published procurement novel Route 42. SM readers can claim a 20% discount by quoting code Route42Supply and ordering through Andrew.Young@cambridge-media.com.