I rise and speak today with gratitude, respect and humility, for the final time as the President of CIPS.
My tenure as CIPS President has come to an end and my successor has been named. It was my pleasure to hand over the baton to Richard Masser as our new President. Richard is a distinguished Fellow of our Institute and had served CIPS in the recent past as Chairman of the Global Board of Trustees. Like every other member, I wish our new CIPS President success in the year ahead.
My tenure as CIPS President was incredibly hectic, exciting and rewarding in equal measure and all this was largely made possible by the diligent contributions of the women and men at Easton House CIPS Secretariat and other CIPS offices and branches around the world. Without your support it would have been impossible for me to advance our agenda and to look back with pride at our significant accomplishments in the last year. Thank you!
In the course of my Presidential Year, I was privileged to meet hundreds of members in branch activities around the world, delivered speeches in several countries at conferences attended by thousands of members, participated in the graduation ceremonies in several continents, interacted with many members at social events, had one-to-one engagements with emerging leaders in our profession, organized industry stakeholder workshops, shared ideas with the Vice President of a large emerging nation and communicated with relevant Ministers of some countries.
Yes, it is time to draw the curtain on a role that has been both demanding and gratifying. So permit me to reiterate that I particularly enjoyed meeting CIPS members all over the world to listen to their stories, their successes and challenges, learn from them and share my dreams. As an Institute we are only as strong as the commitment and dedication of our members allow us to be, and I salute your passion for excellence!
Nothing compares to the smiles, friendship and camaraderie of the CIPS family, the hard-work of volunteers and the passion that individual members bring to make our Institute great. I particularly salute the branch executives for their tireless efforts. For me these are the most beautiful gifts that I will take away from my tenure. Thank you all.
As my Presidency recedes into history, I want to leave you with some final thoughts and a dream.
I like to think that my Presidency took off on an auspicious note, because I became President of the Chartered Institute of Purchasing & Supply and ended as President of the Chartered Institute of Procurement & Supply. It was during my tenure that Her Majesty, the Queen of the United Kingdom approved CIPS’s request for a name change for the Institute (from “Purchasing” to “Procurement”) along with permission to confer Chartered status on our Members and Fellows. Credit for this change goes to David Noble and the team at the CIPS Secretariat who worked tirelessly to secure this coveted approval in October 2014.
This significant milestone acknowledges our enhanced role and responsibilities; our rising profile and transformation journey; from back-office function to a strategic role at the heart of business and organisation. It speaks of substantial progress in the advancement of our profession and Institute. This seismic change was both the reason and impetus for my presidential theme: “A profession comes of age: Raise your game; Raise your voice”. It was a clarion call to rally our members to a common purpose; that of taking our seats at the top table by merit, for the value we can add.
Procurement has come a long way since 1932 when the Purchasing Association was formed. It has moved from being a back office transactional role to a strategic function and one that provides organisations with a competitive advantage.
Procurement is all about bringing value for every dollar, pound or other unit of currency spent - for your team, your employer’s business, for stakeholders and for society at large. Cutting-edge organisations are innovating and reaping gains from better-managed supply chain structures. The question to ask is whether we are doing it well enough.
The truth however is that across the world we see dichotomies of procurement practices, especially between the practices in developed and developing countries, and between the public and private sectors.
In developed countries for example, we observe a much more advanced public and private procurement, where for example central procurement offices have delivered billions of pounds and dollars of savings. In the London 2012 Olympics, developing and executing an appropriate procurement strategy, backed by the right organizational set-up, turned out to be a real value game-changer with extended benefits impacting the wider economy. In other instances we have seen where procurement has become a driver for economic growth.
In developing countries however, rudimentary procurement practices predominates, especially in public procurement that has become synonymous with corruption, modern slavery and infrastructural gaps, to name just a few costly consequences. In these countries, much value is still being left on the table in organisations due to poor procurement practices, and as such procurement has no real name recognition in those countries yet.
This leads me to the only regret of my presidency; and that is that in some developing countries (particularly in Africa) we have not yet found the means for CIPS and Local Institutes to best work together, despite the endeavours of both parties. This does not help procurement practitioners or the procurement profession to combat the issues that I describe above. CIPS and the local institutes must continue to strive to find effective ways for CIPS to ‘be global, but deliver locally.’ In similar vein, I also hope that the participation and engagement of CIPS members with the Institute, at the local Branch levels, will grow at local events, as the local delivery capabilities get enhanced.
Modern society is indeed faced with different issues in developing countries (economy, climate change, etc) and in developing countries (Infrastructure gaps e.g. power and transportation, GDP growth, employment, poverty, etc).
To put in perspective, United Nations at the September 2015 General Assembly ratified the 2030 Agenda on Sustainable Development to replace the Millennium Development Goal (MDGs). UN had identified that US$1.3trillion (GBP850billion) is lost annually in developing countries to corruption, bribery, theft and tax evasion. The agenda therefore includes targets for private and public procurement, aimed at reducing poverty, fighting inequality and tackling climate change,
Many countries are also now taking measures to end modern slavery and human trafficking. We are starting to see increased legislation on supply chains across the world including the Modern Slavery Act in the UK, Bribery Act, etc
Clearly these are some of the key focus of global leaders and are areas where the Procurement community can add significant value and become recognized for the value that it can bring. This is an opportune time and one that we cannot afford to waste as if we miss this signpost, we would have lost a huge opportunity to further transform this profession. We must consider timely action to step into this opportunity space or yield it to others who are more determined. The choice is ours!
This is therefore why it is imperative to Raise your game and Raise our voice.
Well-resourced, high performing procurement departments are going beyond the issues of cost containment, curbing of wasteful and maverick spending, better management of stock and spares to extending their influence within their organizations by working closely with customers and other functional groups to discover new ways of adding value, even in areas previously difficult to optimize. In addition to uncovering hidden value, some procurement specialists have been known to challenge and improve the way products or services are delivered to market.
Let me clarify upfront that we must always deliver on our basic function of competitive rates, quality products, timely execution, risk management, etc, but these are givens and the basic foundation that we must consistently deliver on.
However we must move beyond price focus and develop our potentials, taking advantage of opportunities offered by Big Data, Internet, Robotics, 3D printing, Uberisation, and so forth, and bring new technology, creativity and innovation into our thinking and the work that we do.
We must understand the language of the business and how value is defined. Value in this context extends beyond the customers, which is where revenue comes from, and encompasses the ecosystem of the enterprise and suppliers, it flows into the larger society and we must always think of how procurement activities can impact positively society.
An example is Nigeria LNG Limited’s $1.4 billion contract with Samsung and Hyundai in South Korea to build six new LNG ships. This followed a transparent tender that produced extremely competitive price compared with the Industry benchmarks. However additional value was extracted from the deal including 600 Nigerians trained in shipbuilding in South Korea; exported $15mln locally made materials (cables, paints, furniture, anodes, etc); two shipping simulators worth $5mln each installed in Nigeria for training staff locally, and a dry-dock facility to be built in Nigeria. Samsung and Hyundai committed $16 million to this and also to provide technical partnership with local investors.
The second is SABMiller; the world’s second largest brewer, whose procurement team brought creativity into their sourcing activities and by so doing, dramatically changed the society where they operated in. By thinking differently on sourcing of raw materials from localities that they operate, they changed their input from hop and barley, to cassava, a crop abundant in Africa. SABMiller was able to launch two cassava beers – Impala in Mozambique and Eagle in Ghana, which has now created a new revenue source for SABMiller, boosted the local economy and empowered poor farmers.
Aligning sourcing efforts more closely with corporate strategic goals remain key and Business leaders are becoming aware of the fast-changing nature of the world and the strategic benefits that can be achieved through the intelligent use of procurement and supply management. These include competitive supply chains, improved product development, and faster times to market—in addition to significant advantages associated with sourcing from low-cost countries.
We need to attract talents into the profession and support their development; talents with the potential to become CEOs of organizations. We must ensure they are inquisitive about the business and understand how to add value. We must ensure we give them a voice to bring their creativity and innovation. Mentoring, Coaching and Continuous Professional Development will be key and we must challenge them to raise their game and raise their voice.
This reminds me of my own story; “Storeroom to the Boardroom”; having joined Shell in Nigeria as a procurement trainee, starting work in the warehouse and today being the CEO of a multi-billion dollar annual revenue company. I hope my story (and that of many others) will inspire members, especially the young ones that procurement indeed provides a career opportunity to aspire to the top.
On “raise your voice”, I have noticed that procurement professionals sometimes have great ideas for improving the business – not just by reducing costs but also by transforming processes and opening up new revenue streams, but they seem to be shy to raise their voices and be heard in their organizations and beyond.
In my many years of working across several countries and companies, I have found that procurement people are shy; I have wondered maybe it is because the profession started as a “back office” function and as such being upfront in approach is not second nature to us, or maybe it is the conservative nature of our training, or maybe it is because majority of Chief Procurement Officers (CPOs) do not report directly to CEOs.
Whatever it is, whether procurement has a direct line of communication to the top or not, procurement professionals must find ways to make their voices heard. I know it is not easy, but take my word for it – a smart CEO will always listen to great and creative ideas. I am a CEO and I know that.
I encourage Procurement professionals to always share the success stories they have achieved in their organizations and careers so others can learn and possibly replicate. We must communicate the value we add, knowing that good stories don’t simply tell themselves.
As my presidential year comes to an end, I can say with confidence that the sky is the starting point for procurement professionals, but we have to seize the moment and make a difference. Capitalizing on opportunities will not just happen by itself. It requires planning, perseverance and courage.
The future of our profession is bright — but it is not guaranteed. However, if we do raise our game and raise our voice, I can say with confidence that our work will validate that we are a force for good.
I look forward to a time when our profession will be recognized as a strong force for tackling major global issues – and where procurement is a lead item on the agendas of bodies such as the United Nations, G7, G20, World Economic Forum and so on.
I look forward to a time when more than 80 per cent of CPOs in organizations will be reporting to CEOs, when 20 per cent of CEOs globally are from procurement, and when Government Ministers are drawn from the profession.
This is my dream, one that I hold on to, and also leave you with, one that I hope to experience in my life time.
I leave the stage now to join the group of Ex-Presidents, but be rest assured of my continued support and participation to advance the objectives of our great association
Thank you all.
Babs Omotowa, CIPS President 2014-15