Back to the bad/good old days - a study
David Rae
1 Comment
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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Reader Comments (1)
I read your blog with interest as this is a topic that will be with us for quite some time. I am a US based Supply Chain executive that has helped a number of companies transform their Purchasing organizations into Supply Chain management organizations. Many of the current procurement leaders within the company’s struggle stepping up to a new level of influence and skills development for a few very valid reasons.
The first and perhaps most significant issue are having a leader take a giant step up in terms of influence with the executive suite. The current Procurement organization is most likely reporting to the VP of Operations, or the VP of Engineering, etc. Stepping up to the next level, and driving change within not only Supply Chain, but also with Production Planning, Engineering, Logistics, etc. can prove to be very difficult. It is a far easier accomplishment for an outsider, can step into the position without any preconceived notions of “position”.
The second cause for struggles in this area is the need for cross-functional experience to be able to better understand the everyday business drivers of peer organizations such as engineering, quality, finance, IT, marketing, etc. Armed with that knowledge, fair and reasonable compromises can be made on improving key business processes such as supplier qualification criteria, performance metrics, negotiation team structure, SIOP programs, PPV goals, and others.
Finally, raising the skill level and capabilities of the organization quickly to become more strategic in thought after years of chasing supplier price reductions is not easy. I recommend bringing in outside certification training such as CPM or APICS to raise the level of awareness and provide the necessary business tools to develop and execute a strategic sourcing strategy.
Sincerely,
Arvid Karl Pedersen