Procurement
"Isn't it just buying stuff?!"
19
May 2015,
Iain C. Steel
A few years ago, I was invited
to present a proposal to a prospective new client to provide
support to help them implement new procurement processes and
policies across their UK-wide operation. I won’t name
names (for reasons that will become apparent!) but this was
for a large successful company with multiple worldwide
locations and third-party spend that could be measured in the
hundreds of millions.
I was ecstatic! [We]
were (and are) a small niche consultancy and I would be up
against some of the big-boys. What an opportunity!
Following my tender submission, I was delighted to have been
selected to progress to the next stage of their decision
making process.
So, suited and booted with
laptop in hand, I duly arrived to deliver my
presentation. Throughout, my audience were engaged;
there were knowing glances, nods of agreement, wry smiles and
even a few laughs. It was going swimmingly.
Then…
“What do Procurement actually
do? It’s just buying stuff, isn’t it?”
Initially, I thought he was
joking. Surely, having been sufficiently giving of their
time to listen to me (and presumably others) wax lyrical about
the merits of a new approach to their procurement strategy,
processes and structures, they must understand that it’s much
more than ‘just buying stuff’.
I laughed… He waited…
I laughed, more
nervously... He waited, more pointedly …
I eventually answered in a
typically consultant-like way – I probably used the words
synergy, core competencies and scalability, just to make sure
that I was adding vocabulary, if not clarity – but I knew that
I had lost them as potential clients. Someone other than
[We] would be helping them ‘buy stuff’.
Having thought about it, he
was right - it is just buying stuff – but our profession
relies on us having a diverse range of skills so as not to
just ‘buy stuff’ but to buy stuff well. So, what does
this mean for us?
Many of us will see the value
of getting a degree or MCIPS to make sure that we have the
minimum requirements for the next job we apply for, but when
it comes to our professional development there seems to be a
lack of consensus about what is valuable in a rounded
procurement professional. When it comes to valuable
professional skills, to paraphrase Newton's third law, for
every viewpoint there is an equal and opposite viewpoint on
what matters most but it is hard to argue with the diversity
of skills that most employers would like in an ideal
world. In addition to what we would expect to be core
procurement competences (category knowledge, negotiation,
supplier management, etc) these are the desirable skillsets
that my clients seem to value time after time:
Sales:
Top of the list. The exact opposite of what
many people in Procurement seem to believe they are
doing. The reason I value this skill so highly is that
it covers many of the basic building blocks of our
profession. Whether we are trying to win over a
stakeholder, negotiate a consensus across business areas or
even trying to sell the benefits of our company as a customer
of choice to a supplier, this is an undervalued skill amongst
procurement professionals. There is also an even more
basic reason to be a good salesperson, often supplier
interactions are managed through a supplier’s sales team and
it just simply makes sense for us to be able to speak the same
language – or if you want to be cynical about it, to
understand their tricks of the trade to avoid the pitfalls!
Communication:
This is one of the most important skills that any
business person can have, but it is sadly lacking for many
professions. Procurement is not averse to complaining
that our stakeholders don’t always keep us informed, but as we
are not necessarily a ‘natural’ business partner in many
organisations, it is even more important for us to up our
game. It is better to over communicate than under
communicate.
Plain English:
We love a TLA, don’t we? (Three Letter Acronym).
Between our PQQs, RFPs, ITTs, SLAs, KWAs, etc.
procurement-speak can start to sound like a military
maneuver. Using TLAs, or technical language generally,
is exclusionary and doesn’t help our relationship with our
colleagues and suppliers.
Literacy / Numeracy:
This should be the basics. I’d like to be able to take
this for granted, but unfortunately it is very often missing
from even experienced professionals. It’s difficult to
take serious a negotiation that starts with a poor grasp of
the numbers or with a glaring spelling mistake in a
presentation.
Risk management:
Financial risk is just one of the risks we need to
understand. We must accept that the supply chain can add
a whole host of risks; security of supply, CSR, regulatory,
IPR, reputational, contractual and so on, and for this reason
it is important that we have sufficient knowledge of what we
are buying to be able to choose the most appropriate supplier
to manage and mitigate all of the inherent risks.
Accountancy:
It is reasonable that we should expect the legitimacy of our
numbers to be challenged. The Procurement professional
will need to know enough about the accounting treatment to
understand why CAPEX vs OPEX matters, how a company balance
sheet works, the fully loaded costs associated with change (or
doing nothing), the implications of tax, etc. We will
also need to understand how to interpret other financial
documents; from finding out the complete spend picture by
analysing transactions against the chart of accounts to taking
a view of the financial viability of suppliers. You
might not need to be an accountant, but you’ll at least need
sufficient knowledge to talk knowledgeably to one.
Market research:
How do you know what the supplier market is
doing? The success of your supplier recommendations rely
on understanding their markets, their drivers, their
objectives, their cost input and similarly what your
competitors are doing. When defining your category plan,
knowledge, absolutely, is power – obtaining this knowledge is
a skillset.
Soft Skills:
In procurement, it’s easy to play ‘bad cop’ in a
negotiation. Our business colleagues have to maintain a
relationship with any supplier, so procurement professionals
are often the ones in the position of giving the hard
facade. However, you can deliver a difficult message
with civility, politeness, respect and with emotional
intelligence. These are important skills in business -
no-one wants to do business with (or work with!) Mr/Ms Nasty!
Business skills:
This sounds like a ‘catch all’, but what I want from
our profession is that we are first and foremost good at doing
business. What this means is that we are able to be
commercially savvy, have time management and organisation
skills, we are able to present clearly and concisely, we are
innovators, we are flexible and adaptable and have a desire to
learn.
I have long been of the
opinion that the profession of procurement is one of the most
well rounded business professions requiring detailed knowledge
in a wide range of disciplines. However, as with every
skillset, it is up to us as procurement professionals to
ensure that we keep our knowledge relevant, up to date and of
sufficient depth that we are seen by our professional
colleagues as expert advisers and business partners – not just
the folk who just buy stuff.
(This
article was first published in the May 2015 edition of
In-procurement Magazine, pgs. 16-17).
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