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Need for Procurement-Expert-Generalist in the changing Procurement world

by Ipsita Suman , Principal Analyst, Indirects

21 July 2019

Abstract/Business Case

1 Introduction

Procurement has been hit hard by disruption, be it reputational risk, supply chain resiliency, or digitization. With the changing process and system, it is important for procurement professionals to evolve to strike the right balance between tactical work, strategic initiatives, and value creation.

2 Main

Procurement must evolve in order to align with the changing demands. Having a combination of soft and core skills would enable procurement professionals to connect the dots and focus on strategic initiatives. Procurement professionals can introduce a generalist approach in their roles in order to connect several teams and maintain balance in the people-process-system trinity.

3 Recommendation

Procurement should focus on strategic initiatives and avoid becoming obsolete by considering the broader picture.

Introduction

Procurement has been evolving by leaps and bounds. From being a mere support function till a few decades ago, it has now transformed into a panacea of almost all business problems.

Want to improve your brand reputation? Have a collaborated supplier relation to avoid product recalls

Want to be more sustainable in daily operations? Introduce paperless systems and centralized data repository

Want to have sustainable energy goals? Develop crucial suppliers

Want product innovation? Identify innovative suppliers

Want to minimize the Supply Chain Risk? Develop a strategy to accomodate supply chain and supplier financial risk

The Deloitte CPO Survey 2018 illuminates a few shocking facts that indicate how procurement is unable to evolve as fast it should in order to contribute better.

Only one in four procurement leaders are excellent business partners that contribute significant strategic value.
51 percent of procurement leaders believe their teams are not sufficiently capable to deliver on their procurement strategy.
The overall supply chain transparency is poor, with 65 percent of procurement leaders having limited or no visibility beyond their tier 1 suppliers.

Why does this situation exist? Can procurement really help here in some way?

The solution to better procurement—involve or develop Expert Generalists in procurement.

Bain & Company Chairman Orit Gadiesh coined the term expert-generalist, which she defines as, ‘Someone who has the ability and curiosity to master and collect expertise in many different disciplines, industries, skills, capabilities, countries, topics, etc.’

Need for Procurement Expert-Generalist

Expert-generalists can more quickly adapt to change and can help make unbiased decisions that honor the needs and aspirations of a majority (if not all) of the teams in picture. The changing world scenario calls for procurement to adapt.

Industry 4.0 technology is making systems more integrated and susceptible to cyber-crimes, highlighting the need for secure digital systems and robust technology deployment. This calls for reduced chances of error in technology implementation, while focusing on change management and project manager skills.
Design Thinking requires empathy and a human-centric approach to develop processes, frameworks, and KPIs. This involves Innovation/Value creation Manager/ Business Partner roles.
Risk Management is required in all stages of procurement, whether it is strategy development or supplier management. This calls for a 360-degree view of procurement.
Consumerization of Procurement calls for the introduction of customer and supplier feedback, as well as marketing and relationship strategies. Procurement is no longer viewed as a support function alone, but also as a profit center.
Sustainability calls for resilient supply chains with an increased focus on Brand Reputation, supplier visibility (best if beyond tier II or at least tier II). This requires better supplier integration and collaboration with the top suppliers.
Agility and automation are here to stay, and if procurement is unable to adapt to this change, it would not sustain. This calls for rapid and continuous digitization and innovation.

Approach to becoming a Procurement Expert Generalist

Things to remember when developing a Procurement Expert Generalist

Balancing the holy trinity: People, Process, & System

For each type of system implementation, there should be a corresponding change in the Process and People. Organizations currently focus on systems actively. The process improvement/ change comes after a redundancy/error is reported after many iterations. However, people are expected to change by themselves, and procurement teams are left stranded without a proper framework development.

Connecting the dots between Planning, Sales, Marketing, Finance, Innovation, and Engineering
Procurement is no longer considered a purchase support function, and is increasingly becoming important for other teams. In such cases, having experience and knowledge in other domains would enable the procurement team to make unbiased decisions. This also helps to widen the network, learn from innovations in other domains, and apply the knowledge in another domain.
Continuous Improvement and adding soft skills

Figure: Hard and Soft skills in procurement
Procurement consists of several hard skills such as Negotiation, Budgeting, etc. Soft skills such as design thinking and consultative selling would enable the procurement team to interact with other teams and make informed decisions.

Career Path for a Procurement Expert Generalist

How to become a Procurement Expert Generalist?

Skills of a Procurement Expert Generalist -
Finance Advisor - The procurement teams work closely with the CFO. Therefore, concepts such as total cost of ownership (TCO) modeling capabilities, understanding currency trends, capital market events, discount rates, global economic indicators, and relating it to the price movement are becoming important issues.
Legal and Risk Manager - The procurement team must have a bird’s eye view of external market factors (supplier, socio- economic, political) and internal demands and goals; hence, having a consulting mindset would be important for dealing with the market dynamics.
Relationship Manager - Procurement teams must be better equipped and prepared to maintain harmony in the business by being the communication link between business unit managers and external suppliers for important dialogues, drive the root cause analysis for product issues, or other forms of problem-solving sessions.
Internal Consultant - Procurement teams play an important role in managing Business Continuity Plans by analyzing High-Risk suppliers. With mandates for responsible sourcing, procurement has increased the requirement for understanding legal nuances.
Business Partner - There is a need for a role which would pass on information that can be leveraged across business units and procurement teams. Project manager skills, consultative selling, and design thinking skills are key to this role.
Supplier Coach - Procurement teams would work closely with key suppliers in order to support process improvement, explore and understand technological strengths and weaknesses, and create incentives for aligned technological development.

Conclusion

The best-in-class procurement teams are moving towards Business Partnership and Supply Chain Innovation. Cost Saving skills have become mandatory for the procurement team. The core functionalities, such as Value Creation operations, are being kept separately for ease of work.

However, soft skills, along with others such as Finance, Relationship Management, and Consulting are being required at an individual level to improve the integration of procurement with the business and other functions.