A function which for years did not have a seat at the board is now looked upon to make an impact beyond delivering bottom line savings.
Many organisations are recognising that procurement can offer a broader value proposition. Whether a company’s strategy is organic or inorganic growth, differentiating through uniqueness or low cost, increasing profit or penetrating new markets, procurement has an important role to play.
The CIPS/Hays Procurement Salary Guide 2017 reveals that demand for procurement professionals outstrips supply and there is a skill shortage in this profession. So, what are the skills that organisations should look for in today’s procurement professionals? Whilst negotiation, stakeholder management, analytical and category knowledge are some of the core skills that one is expected to have, organisations should value, develop and recognise the importance of next generation procurement skills.
What are the next generation skills?
Organisations that are making a shift from traditional procurement to a more strategic function should focus on the skills below to match with today’s procurement value proposition. Some of the next generation procurement skills are:
For an evolving function like procurement there are more opportunities to explore and drive innovative solution. Outside-the-box thinking and coming up with smart ways of extracting cost from the entire procurement process, not just driving down the unit cost, and improving stakeholders’ experience should be at the forefront.
Procurement is very dynamic; it requires people who can easily handle and execute change management. Execution is the bridge between conception and implementation. It’s great to have a vision but it can only be realised if the plan to achieve is executed well. Many strategies don’t succeed because of poor execution and change management.
• Puzzle solving
Procurement is made up of different pieces that need joining up to create a complete picture. Spend analysis, market research, supplier risks, terms and conditions, service levels, price, stakeholder engagement and internal customer satisfaction are many of the jigsaw pieces required to be amassed when forming a procurement strategy. Organisations should focus on honing these skills in their procurement professionals.
Everyone in the organisation is affected by procurement. The ability to communicate with stakeholders at all layers is an important skill. Don’t forget that procurement is still evolving and maturing in many organisations, therefore influencing stakeholders and creating trust in the procurement brand needs excellent communication skills.
Fluids find their way into any voids easily and settle in. Procurement is not always invited to the party, there are discussions happening with suppliers or deals where procurement is left out. Procurement professionals need to be proactive and find their way into the business and feel comfortable with settling in their space, just as fluids do. Ultimately procurement professionals are “business advisors” and they can play that role well by helping the stakeholders to feel comfortable when procurement is around, earning their confidence and trust.
How do I get there?
Organisations should map the current skillsets that exist within the procurement function and assess the function’s maturity level. The skillsets of a function should synchronise with its maturity level. There are four levels of procurement maturity:
• Zero procurement – procurement is undertaken by non-procurement professionals
• Transactional – the procurement function is just processing purchase orders
• Tactical – procurement is reactive and always trying to catch up with business needs, typically everything is ‘bid and buy’
• Strategic – procurement is ahead of what the business requires, driving innovation, advising business and reducing cost through innovation and supplier partnerships
Depending on the current level of procurement maturity and where it desires to be, organisations should be able to analyse gaps in the skillset and draw up a plan to address it. Unless there is a desire to transform into a strategic procurement function and put resources and processes in place to achieve that, it is not advisable to develop or recruit new talent with strategic skills.
There is no point in developing the next generation procurement skills without support from senior leadership to transform procurement to a more strategic function. It will create an imbalance and could destroy procurement’s ability to create value if the maturity level of the function and skills are not in sync, as shown in the figure above. Mismatches could include trying to develop next generation skills in a tactical procurement function, or not updating skills if the organisation has moved into a strategic function.
☛ Avnish Patel is procurement manager (UK/IE operations and EMEA corporate services) at Air Products