Could Procurement become extinct as a Profession?
Procurement has arguably been around since the dawn of trade. So let’s say Procurement has been around for “Years” - which is a very British way of saying a very long time, and we’re unsure of quite how long. However, I enjoyed this read, sensibly placing Procurement back at least 200 years ago.
The role of Procurement in our organisations has changed dramatically over the last decade. Actually - let me re-write this sentence.
The role of Procurement in the best organisations, where the best procurement activities happen, has changed dramatically over the last decade.
For most, we’re still wallowing in talk of cost reduction and being the gatekeepers of spend, which is mainly out of our control when war, covid and global supply chain disruptions occur.
For me, these changes that the best organisations are forging (I think the likes of BT Sourced here with Cyril at the helm) have shown us what Procurement can strive to be.
However, some will understandably look on with a great deal of uncertainty about the future of Procurement and whether it will even survive as a profession. And the reason they are doing this is that they’re executing Procurement like it’s the 90s. Come on, we’re better than that - and I don’t want to have to do a post sitting in a nappy (diaper) to highlight this point.
Procurement executives must understand this changing landscape to ensure they are ready for what lies ahead.
Procurement: The End of a Profession?
Procurement is a unique profession in that, outside of legal and finance, it’s difficult to find another team that covers such a vast array of a company. This is great as it means Procurement sees almost every part of a company. This is an incredible amount of knowledge at our disposal.
But how do we get the most out of this knowledge?
For me, Procurement has the opportunity to create value for their organisation in ways that other professions cannot. Procurement professionals can shape the future by influencing how organisations manage their relationships with suppliers through their procurement strategy.
They can help lead change by driving innovation through procurement transformation (digital Procurement has to happen). They can be agents for positive impact by creating an enabling environment for suppliers through best practices in commercial risk management, ESG, and just about anything else the organisation needs.
A Changing Business Landscape
In today’s business landscape, supply chain management is the new frontier *inserts Star Trek music*.
Procurement has historically been an intermediary between suppliers and buyers (the buyers being requesters within your business).
But the role of Procurement needs to evolve into a true business partner who can contribute to revenue growth by creating value for all parties involved in the supply chain.
Some of you reading this will think that this is millennial drivel. And I kinda hope some of you do believe this. It’s great because I’ll be happy when you read this, ignore it, and become extinct in this profession in the next 5 years.
I’ll be happy that we’ve lost another procurement dinosaur in the process, who was happy protecting the status quo above the continual progression of this fantastic profession.
To be relevant and contribute value, procurement professionals must understand how their organisations operate and what factors influence their decisions on which suppliers are chosen for each assignment.
They will also need a firm grasp of technology and its application in different parts of their organisation.
Then, combining all of this knowledge, Procurement should leverage the innovation and insights from its most important partners and bring home new go-to-market strategies and opportunities.
Imagine you were a restaurant that had to close during covid. You’ve got a bunch of cold food suppliers on your books, but no one is buying from them as you cannot open them. Instead of wasting that opportunity, you made your CEO aware of all of this available freezer space. You started creating frozen meal kits using these suppliers as storage, logistics and delivery in your town/city. You’ve just created a revenue-generating idea that could keep the company afloat during tough times.
Procurement needs to be on it.
Procurement needs to leave its silo. It needs to stop being a servant and become part of the organisation.
Procurement’s Role in the Future
Procurement’s role in the future is to become a true business partner. For Procurement to remain relevant and be able to provide value, it will need to embrace the changes that are happening around it.
As previously mentioned, there are many different reasons why this is happening. It will require a mindset shift for procurement professionals to thrive in this new era of Procurement.
Challenging the Status Quo
Procurement needs to change.
We need to foster innovation within our organisations. We can do this by ensuring an environment where people feel comfortable trying new things without fear of failure or retribution. If something doesn’t work out as planned - no worries. Well done for pushing forwards.
To survive, Procurement must emphasise becoming relevant and a true business partner. For this to happen, Procurement needs to be able to provide value in two areas:
To the business - Procurement can help drive efficiency and productivity by increasing execution speed and reducing costs across the supply chain. It also plays a role in driving innovation through its ability to source new technologies and innovations that can enhance the customer experience or enable new operational models that increase revenue streams or reduce the cost of goods sold (COGS)
To supply chains - Procurement teams have access to deep insight into suppliers’ capabilities, enabling them to manage risks and identify opportunities throughout their entire supply chain.
How can we achieve this?
Less focus on cost reduction and more on outstanding performance, where cost reduction/spend management is a typical by-product.
Using a Procurement, Contract and Supply Chain tech stack that radically enhances your visibility of what can go wrong and new opportunities.
Conclusion
There are some significant challenges facing procurement professionals today. First, they have not been allowed to show what they can do as professionals; instead, they have been relegated to transactional workers who fill out forms and order supplies.
The second challenge is whether Procurement will survive as a profession, given how rapidly technology changes every day and its failure to keep up with these changes. Procurement must embrace technology in this space to keep up at this point.
The third factor is organisational culture—procurement teams must start working together with the business and lose the silo. There is a strong argument for an embedded way of working here or a central hub tightly connected to every part of the business due to an incredible customer experience via technology.
We’ve got a lot of work to do as a profession if Procurement will survive.