People in Procurement – News and Comment

Back to the bad/good old days – a study

Posted on 19. May, 2009 by .

I was invited along to a roundtable discussion the other day (organised and chaired by 4C at the Procurement Leaders Forum).

Although brief, the discussion covered a lot of ground – not least, talent. (It seems whatever forum or seminar you attend, the subject of talent soon rears its head.)

So I used the opportunity to test a theory – or, at least, a hypothesis – that most middle-manager level procurement people are, at heart, negotiators and lack the strategic ability to take their function to the next level.

The example I used is a story I’ve told elsewhere on this blog:

Having spent almost three years’ on a strategic transformation of his team, one CPO was asked by senior management to return to short-term cost cutting to address the current climate.

No real harm in that. The problem was that this particular CPO’s team was delighted. Back to the good old days of hitting suppliers over the head with a big stick…

Having told this particular story at the roundtable, I was quite pleased by the reaction (I got a laugh) but not necessarily the response: lots of knowing nods and smiles.

So, to put this one to the floor – is the average procurement team happier when simply negotiating price? And if so, how the heck do we successfully take procurement to the next level?

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Five ways for procurement and HR to work better together

Posted on 18. May, 2009 by .

To most organisations the cost of human capital – whether full time or interim employees, or the infrastructure needed to support them – is the biggest cost they have to bear, so it’s perhaps not  particularly ground breaking to suggest that procurement must work more closely with HR to reduce costs.

Whether this happens, however, is debatable. In many cases, temporary labour is still sourced by the business unit or, at best, HR, with little input from procurement. The recruitment of permanent staff is even more of a dark art.

So, an article in Human Resource Executive, written by Bernadette Kenny, chief career officer and senior VP of human resources for Adecco Group, North America, offers some food for thought by outlining five ways in which HR and procurement can work more closely with each other.

The full article can be found here, but here’s a roundup of what she wrote.

1 – Speak the same language
In other words, lose the buzzword bingo and the TLAs (three letter acronyms) and at least the two parties will understand each other.

2 – Trust and value each other’s expertise
Sometimes more difficult that it sounds (especially when it comes to HR…) but if both parties respect each other and acknowledge the common business goal, life will be much easier.

3 – Remember soft skills when establishing the partnership
Procurement  shouldn’t try and “take over” negotiations or vendor relationships.

4 – Create a consistent approach to vendor relationships
This will help working relationships between the company and its suppliers.

5 – Bring services procurement expertise
HR procurement is not the same as buying widgets, after all.

While the article isn’t particularly leading edge or ground breaking, it does provide further evidence of how other functions see working with procurement as an inevitable part of modern business.

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A career in procurement – an Olympian effort

Posted on 16. Apr, 2009 by .

A question I often ask procurement executives is whether or not they would recommend a career in procurement to their kids – I find it can be an excellent indicator for how highly regarded the profession currently is. (Afterall, if those who already do it won’t recommend it to their own children, what hope do we have?)

The reason I ask the question is to try and understand the talent crisis facing procurement. Whether it’s CPOs struggling to hold on to staff or not enough bright young things coming through, it’s clear that something must be done to raise the profile of procurement as a viable profession.

There are many ways of doing this. Ton Trommelen at DSM International partners with universities and business schools (as do several others), Nestle has established its own internal procurement university to train people up, Centrica employs a buddying system to help develop its people…

Different strokes for different folks.

So I was interested to read an article in the UK’s Guardian newspaper, sponsored by the UK government, with the aim of attracting bright graduates to its Government Procurement Service, which established a graduate training programme to help attract and develop recent graduates.

One of the comments in particular from a graduate who is on the course makes interesting reading and highlights the problems the profession is facing very well.

“Procurement wasn’t a profession that I or any of my fellow trainees had ever considered. We were all looking at graduate schemes at the milk round and the GPSGS [government's graduate training programme] was new at the time we applied,” said Leigh Kopec, a graduate trainee who is now working on the Olympics project. “People know what buyers are, but I don’t think a lot of people know what procurement is. It sounded interesting and the more I found out about it, the more interested I became.

While we naturally have to take the article with a pinch of salt (it is sponsored, after all) it does highlight the type of issues senior procurement professionals face in getting bright young things on board.

But it also offers a bit of a lesson in how we can go about fixing it. Large organisations must get out there and show off their procurement capabilities at career fairs. Equally, CPOs must stand up and be counted – both within their own organisations and the wider world.

In fact it’s the latter which may well have the biggest effect. CPOs of large companies have an excellent opportunity to put their head above the parapet and shout about the value they are bringing to their organisations during this downturn. Whether this is blogging, commenting on news stories, sending out press releases, you name it, there’s a way to be heard in this connected world…

It’s time to tell the world how good a job procurement is doing because if you can’t do it now,  you never will be able to. It could provide the profession with a much-needed boost and attract the type of talent that wouldn’t have otherwise been available.

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The Big Debate: The internal customer problem

Posted on 11. Mar, 2009 by .

When I first started in procurement I was confused by the use of the word “customer”. It took several conversations with procurement professionals until I realised my mistake – in the world of procurement, the word has more than one meaning.

Most people I speak to in this profession refer to the internal business units who benefit from the work provided by the procurement function as “customers”.

But this immediately presents problems. It paints a picture of subservience to other areas of the business which puts procurement in a much weaker relative position. It gives internal business units the confidence to demand things which they would not be able to demand in a relationship of equals. And it lessens procurement’s strategic influence over the company as a whole.

Procurement brings to the business a huge amount of value. But too often it is seen as a poorer cousin to many other departments – whether this is production, research & development, marketing, sales or finance. By referring to these other departments as “customers” or “clients” procurement leaders are allowing this skewed relationship to continue.

This also poses many implications for the image of procurement. What ambitious talent will be attracted to an area of the business which “serves” the rest of the organisation? They would be far more likely to be attracted to a position which engages with suppliers across the globe, which has a direct impact on the company’s bottom line and which manages corporate-wide projects.

Sound familiar?

To finally put procurement on the executive map, to increase its influence over key stakeholders and to increase its attractiveness as a career of choice, procurement leaders must stop referring to their equals as customers.

Because they are not customers – they are colleagues.

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Procurement? It’s all about relationships

Posted on 11. Mar, 2009 by .

An earlier debate on this blog offers some evidence of how seriously procurement professionals take what their profession is called. The discussion about the differences between procurement and purchasing are long running and quite heated – with many in the procurement camp claiming that the word purchasing over simplifies what it is they do.

A recent conversation with Jonathan Peacock, the chief financial officer of the pharmaceutical division of Novartis, seemed to have added fuel to that fire. CPOs aren’t CPOs, he said, they are effectively “cross-functional project leaders”. I could see his point – afterall, what better name for someone who’s real responsibility is to make sure that large-scale projects are successfully completed regardless of whether its for operations, finance, facilities, property or the staff canteen.

However, a job posting in today’s Guardian newspaper takes things even further. Apparently, Harlow Council is searching for a “relationship and commissioning” manager “to help drive down the costs of providing services and activities”.

“The successful candidate will have responsibility for developing the council’s revised procurement framework and will need to show an entrepreneurial approach to service commissioning by outsourcing areas of operation and coming up with new models of service delivery,” it continues.

I have to admit, I quite like the term relationship and commissioning manager – maybe this is the anwer to the skills shortage…

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New York, New York, risk and talent

Posted on 06. Mar, 2009 by .

I am currently in New York having just completed our first roundtable in the US – a bit of a landmark for Procurement Leaders and an excellent event as well.

The discussion was on procurement risk and we were lucky enough to call on the expertise of 11 high-profile procurement leaders. The attendees included the CPOs, or equiavalent, from Bristol-Myers Squibb, IBM, Pfizer, The McGraw-Hill Companies, the New York York Mets, Air Products and Chemicals, Marsh & McLennan, Rutgers Business School (former CPO of Colgate Palmolive), News Corporation, and Cadbury, as well as our event sponsor BrainNet.

The strength of having such a variety of industries represented at the event are not difficult to see and it really did give us the opportunity to garner opinions and knowledge from a diverse background.

The discussion was, as one would probably expect, varied and interesting. But one issue that raised its head once again (and it’s an issue which finds its way into every discussion I seem to have about procurement) was talent and skills.

Everyone was in agreement that there is a serious skills gap in procurement for people who can recognise and react (or, even better, to be proactive) about risk in the supply chain and the procurement process. It led one of the attendees to remark that successful multinational company procurement was all about “the geographical dispersement of talent to aid risk mitigation”. In other words, having people on the ground in your supply chain who can provide the business with early warning signs of risk – as well, one might add, as opportunity.

Quentin Roach, the CPO of BMS, offered one excellent example of a potential risk which slipped through the net. One of his products relied on an ingredient that was produced as a by-product of the automotive rubber manufacturing process (rubber used for high-quality tyres). But the fact that car sales, and therefore production volumes, had fallen off the edge of a cliff had not made it on to his senior team’s risk radar. Of course, if there are less tyres being made, then the by-product becomes more scarce and, if nothing else, prices increase.

It’s a good example of how procurement must take a step back from the business in order to see the whole picture. But it’s also proof of the requirement for yet another skill in any aspiring procurement leader.

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Would you recommend procurement to your kids?

Posted on 12. Feb, 2009 by .

Most procurement professionals I know are, how shall I put this, old enough to have started a family. So it’s a common subject of conversation over dinner at roundtables and at events.

Of course it’s a good, solid conversation to have. But one thing that strikes me is that I rarely hear people recommending procurement as a profession worth getting into – least of all to their kids. Sure, it can be a hugely varied and fulfilling career. It can involve having relationships with all stakeholders in the business; include foreign travel, good salaries and huge amounts of responsibility…

But would you recommed procurement to your kids?

Most of today’s procurement professionals happened upon their roles. I’m not suggesting they don’t deserve them, rather that procurement turned out to be the right way to go rather than being a long-term professional objective.

How many of us were told at school that procurement would make a good, solid career? Not many, if any at all. How many of us decided procurement was where they wanted to be before we got there? Again, not many.

Until this changes, until we recommend pursuing a career in procurement to our kids, the profession will always be one, two, maybe three steps behind the likes of law, accountancy and finance. Not to mention marketing and sales.

So, would you recommend a career in procurement to your kids? I suspect probably not.

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The mainstream press says it’s our time

Posted on 28. Jan, 2009 by .

There was an interesting little nugget from the UK’s London Evening Standard the other day, which commented on the findings of recruitment company Hays. “According to Hays, which used to make a good living from filling jobs in the Square Mile and Canary Wharf, the recession has spawned a mini-boom for procurement and purchasing specialists,” the story claimed.

Interesting, and perhaps not entirely surprising, news. But what I did find surprising, and refreshing, was that the newspaper wrote about procurement at all – it tends to dedicate itself to pure finance.

Evidence of the continued rise of the procurement professional? Or further sign of the depth of the economic gloom?

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The eye for developing procurement skills

Posted on 07. Jan, 2009 by .

Before Christmas I spoke to Quentin Roach, the recently installed CPO at US pharmaceutical giant Bristol-Myers Squibb. We spoke at length about many things, but one of the nuggets he provided was related to his own working background.

Roach joined BMS in July 2008 from eye care specialist, Bausch & Lomb. In itself this isn’t a particularly interesting or insightful piece of information – the fascinating bit came when he told me what he did there. Although Roach was initially CPO, he was latterly its head of global sales, marketing and customer service. “One of the ideas throughout the profession is how do you take people who are in charge of chief procurement officer roles and expand their responsibilities within the corporation,” he said, expanding on this to say how the procurement profession provides many of the skills required in wider, more senior leadership roles.

Interestingly, he talks of two direct advantages of his move into sales and marketing. “It was an opportunity for me to, one, leave procurement and go into sales and marketing, but also to come back to the procurement side and bring back another set of experiences,” he said.

It provided an excellent example of a procurement executive removing himself from the immediate comfort zone. The benefits of this can be huge – in this particular scenario, however, it seems that BMS is the one which will benefit.

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