Why procurement needs ‘more crazy thinkers’ to tackle risk

Procurement needs to rethink how it responds to risk following “inconceivable situations” to pave the way for a more nuanced approach to strategy management. 

Hitachi Rail Group CPO Rory Lamont said procurement teams need to push back on suppliers that provide “the same old deck and trotted out with the same old set of thinking”.

Speaking at the Supply Management Forum in London, he said: “I get disheartened to see some of the category strategies coming out of teams”.

The way “to engender fresh thinking in the team” is by rethinking “how situations are coming across, and to be able to articulate what the challenges are and what the desired outcome is, rather than saying 'this is what I need' and taking that out to suppliers”, Lamont added.

“You need to push back when you see the same old deck trotted out with the same old set of thinking, and say, ‘if this is the easy option then what's the crazy idea for this area?’ Make sure you put tension into the conversation. Because everything else is going crazy around us, we may as well have some crazy ideas as well.”

According to Lamont, Covid-19 highlighted “the fragility of some of supply chains” and paved the way for a more nuanced approach to risk.

“These challenges highlighted that some of our category strategies, such as focusing on a single supplier, were misinformed. And that was quite a useful trigger to get us thinking again, in a more nuanced way about each category,” he said.

“This attitude of ‘aggregation is the answer’ was the senior thinking about procurement. And that situation helped us break that mindset and allowed us to go into a better, more detailed set of thinking about each of the major categories for manufacturing.”

The collapse of banking giant Credit Suisse and “the failures of institutions” including the recent threat of insolvency to UK postal service the Royal Mail were, he said, “inconceivable situations six months ago”, and added procurement must use this moment to “think about the big institutions that your business relies on” and create risk management plans accordingly.

Other speakers at the event outlined how dealing with growing risk in the profession is paving the way for procurement to become increasingly specialised. 

GEP director of consulting Natalie Henfrey said: “Procurement is moving towards specialisms. If you look at next-generation procurement roles, within procurement teams you will have specific innovation roles, for example, or people who focus solely on risk.”

Visa senior director Sarah-Jayne Aldridge agreed that the function will become more specialised, as procurement is “maybe a bit too multifaceted” at the moment.

“We're going to become more specialist. But I think one of the things that I've done very recently is actually look at people outside of the sourcing function and bring in some transferable skills.” 

Hiring people from outside the function offers the opportunity to give it a “fresh pair of eyes” and do things differently while evaluating traditional operating models, she said. 

Aldridge added: “We've got such a lot of value. And that value isn't necessarily translated. And I think with the supplier relationship management with ESG, with risk appetite, we've got so much more to show and showcase to the rest of the organisation. And I think that makes us a very attractive function.”

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