Procurement today – more complex but more interesting

posted by Peter Smith
11 October 2019

In the last decade, a focus on issues such as technology, modern slavery and the environment has made the profession infinitely more rewarding, says Peter Smith 

While day to day change is generally imperceptible, looking back over 10 years of procurement articles I’ve written has given me a sense of how issues and priorities have changed for procurement professionals in that time. 

The impact of technology was impossible to miss. No procurement function with any pretence to be world-class can hope to achieve that today without strong and appropriate technology. That was less true 10 years ago. 

It was also amusing to read about when I first met a small tech firm called Coupa. It was unknown in the UK then – market capitalisation now is some $9bn! While that has been exceptional, it does reflect the huge growth in the importance of tech for our profession.

But perhaps the strongest observation is that the scope and role of procurement has expanded significantly over the last decade in a manner that has brought both challenges and opportunities. I wrote about the Rana Plaza disaster in 2013, for instance – the tragic collapse of a high-rise building used largely for garment manufacturing in Bangladesh that killed over 1,000 people. That was one of the incidents that drove a much stronger awareness of the importance of human rights in the supply chain, from modern slavery issues to health and safety, or even sexual exploitation of female workers. 

The focus on provenance in the supply chain is another emerging issue. Sometimes there is an element of humour in this, such as investigations that showed the fish we buy might not be as it is labelled. But then we remember the horse-meat scandal, or provenance in the context of blood diamonds and conflict minerals, and realise how serious these issues can be. Then we have huge environmental issues, from climate change to the use of plastics or deforestation, often to increase production of crops that may well be bought by procurement executives working for food companies. 

Organisations are certainly realising now that these are critical issues, not just because top executives want to feel good, but because customers, regulators, policy makers and their own staff want and expect certain behaviours. So what does all this mean for procurement?  

Simply, we have to reflect these changing corporate priorities. The days are gone when we could focus the vast majority of our attention on two goals – cost reduction, and keeping our business running (the right goods and services at the right time, place and quality, we used to say). Now, we have to think about the wider issues too, with literally dozens of different topics making up “sustainable procurement”, or “procurement with purpose”. 

I’ve also seen how embracing this agenda can make the procurement role more interesting and rewarding, and boost the reputation, credibility and positioning of procurement. These issues, which are strongly related to risk management (playing into reputation and brand value), are truly strategic and therefore of interest at board level. Procurement leaders are more likely to get in front of top management to talk about programmes addressing climate change, working with social enterprises, or sustainable raw material supply chains than they are to discuss cost-saving initiatives. 

But there are challenges. The sheer number of potential initiatives brings workload issues; no-one can address everything as thoroughly as we might hope. How do we prioritise, and how do we measure the results – can we know we are making a difference? 

Many of the issues are complex too. When buyers stopped children sewing footballs at home, researchers found the work migrated to factories, which were better regulated. But suddenly families lost income, and school children who were doing a couple of hours’ work in the evening had to leave school to earn money by other means. 

Despite these challenges, this changing role of procurement has been a positive for the profession. We’ve got further to go to understand issues, develop the best approaches and measure the benefits. But looking back, procurement is undoubtedly more multi-faceted and fascinating than it was a decade ago, and that’s worth celebrating. 

Peter Smith is a CIPS Past President, a consultant and author. His new book A Procurement Compendium is available from online booksellers, priced £12.99.  

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