7 Mar 17

Building the skills of a value creating procurement function

Building the skills of a value creating procurement function

The definition of value is changing, and so are the skills you will need. Being a procurement professional used to be straight-forward, we knew doing a good job meant saving money for our organisations. It was our main measure and indication of how we were adding value to an organisation. The more savings we achieved, the better the job we were doing!

But life is becoming more complicated: The rise of digital disrupting our business models and supply chains, political environment changes, and the changing nature of business relationships all create new challenges for the procurement function.  What was once a simple supplier relationship may now be a multifaceted supplier, customer, partner and competitor relationship (or a combination of these).

To keep pace with these changes, procurement needs to evolve. Traditional activities like conducting spend analytics or running RFPs have become predominately an administrative function that many organisations can outsource or move to lower-cost country activities. Procurement should now focus more time and attention on where we can add the most value to our organisations.

A further complication is that the definition of value is changing. No longer is ‘adding value’ just an expression of monetary savings. Value now includes things like risk management, attracting and harnessing supplier innovation, gaining access to scarce resources before a competitor and developing the supplier and supply chain to get new products or services to market faster. All the things that we at State of Flux call ‘customer of choice’ benefits are waiting to be accessed.

Evolving the procurement function to ensure you are positioned to achieve customer of choice benefits means a shift in focus, to the interpersonal skills of stakeholder engagement, influencing and business coaching.  The activities that are currently at either end of the traditional sourcing process provide important (yet under-used) value creation opportunities. At the beginning, where procurement works with stakeholders to understand needs (versus wants), the value opportunity is to think strategically and show how you can make their business areas operate better and deliver against the strategy. Then, at the end of the sourcing process,  the value opportunity is for procurement to take an active role in the on-going management of key suppliers.

This evolution will change the skill-sets we need to add ‘value’ and be a  successful procurement professional. Operating in this emerging environment will require a combination of behavioural and entrepreneurial based skills. We will need people in procurement that can empathise with their stakeholders (internal and suppliers), facilitate collaboration and come up with complex non-traditional solutions that may span traditional boundaries (for example, working across sales and operational domains).

Throughout years of global SRM research, we’ve asked the question what skill-sets are needed for value creating SRM - and the majority of these turn out to be behavioural. Based on the results of our research we’ve  developed a comprehensive procurement curriculum that incorporates a competency framework and highly modular training. This training is also accredited by the IACCM.  

To find out more about how State of Flux can help you assess your current capability and deliver the training that will add value to your procurement department please contact John Newton


Download: The People & Skills Agenda