Procurement has evolved into a position of strategic prominence in business. While that brings many benefits, it also means the function has to shift with the times – and times are changing fast.
At the turn of 2020, climate change loomed large on the to-do list, but within a matter of months the coronavirus pandemic had proved procurement’s most fearsome challenge in decades.
In the longer term, concerns over sustainability and moral rectitude have not gone away. Nor has the requirement to make supply chains more agile, cost-effective and transparent. What does this mean for the procurement leader of the future?
Supply Management asked a group of leading procurement professionals and academics which are the top skills and attributes CPOs will need to succeed.
Having a clear target and working alongside other functions of the business in the wake of Covid-19 has opened the way for procurement to be involved in important business decisions, says Antonia Wanner, CPO at Nestlé. Utilising this, procurement leaders should now focus on creating an authorising space and a legitimacy to act in order to get better at what they do.
Wanner says: “We all had to prioritise [during the Covid-19 outbreak]. We had to select which materials we really want to survive and to put on the shelves and which are most relevant for the consumer. Everyone was in alignment and procurement was a completely natural part of this process.
“We need persistence in maintaining the momentum and this fantastic level of integration. Procurement leaders are in a great position to do that as we have also the insight from the suppliers. We have external insight and the benchmark.”
Michael Lewis, professor of operations and supply at the University of Bath School of Management, says: “There’s an expectation that somehow there’s a freedom with senior roles because you’ve got more authority but, generally, you have more responsibility and consequently it can feel more constrained. Those that manage to break free from that tend to be the most successful, and they do that generally by creating their own authorising environment.
“You’ve got to create the authority, then you can act strategically but you also have a capability. Those things interact with one another. Once those elements are in place, people trust you more and you have more room for manoeuvre and you get better at what you do.”
Listening, learning and building strong relationships will always be important to procurement leaders, but for the future CPO this may be critical to protect firms from future global supply chain disruption, says Liam Fassam, associate professor of food supply chain management at the University of Northampton.
He believes the emergence of social capital has enabled procurement leaders to better engage with stakeholders and suppliers, a crucial element to building resilience.
Fassam says: “Social capital is about understanding the networks you have and your shared norms and values. If you can embed those values within your team, then your team will embed that with your suppliers. You get away from this historically top-down perception of procurement to be more of an amenable, listening and aligned team.”
Bobby Dhanoa, global chief purchasing officer at KPMG, says: “Your learning during times of change has to come from a wide range of avenues and you’ve got to be willing and open-minded to try new approaches because the paths you’ve chosen in the past may not be the paths that are needed today.
“That means being prepared to stand up and challenge the status quo, using your knowledge and insight to influence the organisation to do things differently. You need to be prepared to have that conversation and take that risk, after all, if you don’t ask, you don’t get."
Andrew Forzani, chief commercial officer at the UK Ministry of Defence, adds that: “The balance of power will be with the seller. Procurement will play a key role in the management of these critical suppliers and supply chains. We might even get renamed ‘risk managers’ or ‘supply chain protectors’.”
Procurement leaders in the future must be able to understand and navigate reputational risk. As firms fight to protect their businesses from the impact of Covid-19, some have warned against neglecting sustainability issues and instead building these green principles into recovery plans.
Supply chains suffered as a result of the outbreak because of a lack of planning. By tackling these issues now, firms will be better able to mitigate risk in the event of future disruption.
Mark Stevenson, futurist consultant to the private and public sector, says: “The big game in town is climate change. There’s no point delivering anything to anyone if we’re all burned to a crisp. We need the people who care about this to move quickly… If you can start to make supply chains more sustainable you’re going to be a hero. It should be the ambition of every supply chain professional to say: ‘We’re here to clean up the world’.”
Dhanoa adds: “We have to think differently about our role as leaders today because we have the opportunity and responsibility to make a wider positive impact on the world than we may realise – from sustainable sourcing and supply chain transparency to creating a function fit for the next generation of procurement leaders and helping young people in schools understand that what you buy and why you buy it, has meaning.
“I find it difficult to separate my role in the community – as a parent or as a leader at KPMG – because I know the words I use and the example I set can inspire others and help drive change.
“I think the need for far greater visibility of the entire supply chain is a change we are seeing as a result of Covid-19, especially in areas like manufacturing, retail and beyond. This visibility now has board-level importance and it will change the way that we work and interact with our people, suppliers, and stakeholders.
“A lot of these are things that we have been raising for a while but they have not necessarily been heard, until now. It’s going to be an interesting few years.”
Wanner agrees, concluding that: “There’s no way back because we don’t want child labour or a hotter temperature on the planet. It’s a fundamental belief.
“Now the task is making sure that products are affordable, but they also don’t have a negative impact on the environment from a social point of view. Some of the solutions will cost more, but then that’s the motivation to create savings elsewhere.”