Procurement leaders of tomorrow will need to combine highly refined soft skills, a broad business understanding and digital literacy to elevate their function and put it at the centre of business change in the years to come.
Procurement has never had a better opportunity to be the value adding function that it has always aspired to be.
The exponential technological advancements of the last decade have lowered entry barriers across markets. Procurement functions that successfully invest in and work with these new innovators will give their businesses a competitive advantage. Technology has also vastly improved the handling of large data sets.
Sitting at the intersection between the supply chain and the business, procurement is awash with data, and technology means it can spend less time on data acquisition and analytics and more time on deriving strategic insights from that data. Crucially, that helps the business to make more effective decisions, faster.
In recent years, we have also seen a spike in companies outsourcing key elements of their business. This has led to an increased number of strategic suppliers that need to be efficiently managed in order to ensure consistent high quality of product and service.
These two factors combined generate the perfect environment for procurement to move from its traditional role of “price negotiator” and “process policeman”, to strategic partner of choice, leading business transformation.
However, to do that, it will need a new skillset.
The ‘Right’ Skills
Efficio’s recent 2019 study, “The Human Factor: Strategic procurement and the leaders of tomorrow”, asked 500 senior procurement and operations leaders across the globe what their current top priorities were. The top answer, with 29 per cent of votes, was access to the right skills.
It received 60 per cent more votes than the next top priority, maximising efficiencies in the supply chain. Moreover, nearly half of respondents (44 per cent) put access to the right skills in their top three.
Organisations clearly recognise the need for a new skillset, but what are the right skills? In our view these can be categorised into three pillars: soft skills, broad business understanding and digital literacy.
Procurement Leaders – Influencing & Leading
The study showed 78 per cent of procurement executives believe soft skills are either essential or very important for the procurement leader of tomorrow. By drilling deeper into the results, we can find some interesting insights about how these executives see procurement in the future.
The single most desired soft skill quoted was the ability to influence and lead. This is indicative of a procurement function that is setting the agenda and leading stakeholders to make more effective decisions. Interactions that procurement has with stakeholders will be just as important, if not more so, than those it has with suppliers.
By understanding the business requirements and having a deeper knowledge of supplier capabilities, procurement will not only drive cost savings but also influence the business to select solutions and partners that best align with a company’s strategy.
The second most sought after soft skill is the ability to challenge conventional thinking. As well as challenging the way the business thinks, it needs to re-evaluate and challenge the way it has operated itself for so many years, with the goal of defining what it can do differently in order to move from a function that most organisations try to bypass.
It needs to become more customer centric and challenge itself and the business to move from a savings focussed, to a value-adding function.
Involving Your Suppliers
Thirdly, respondents recognised a need for innovation, creativity and problem-solving skills in the future. This hints at an expectation that procurement activities will go beyond traditional one-size-fits-all RFX approaches to every problem.
It will instead work in a more project-based manner with an agile approach that more effectively meets business needs. An example of this could be involving suppliers in the solutioning, to help define those requirements in the first place.
Although soft skills are generally not part of the current procurement training curriculum, they can still be learnt and developed. But critically, these don’t need to be learnt solely from being in procurement roles.
By positioning procurement on the career path of high-flying and ambitious individuals, it can benefit from people who have honed these skills in other functions but can apply them in a procurement context.
A Broad Business Understanding
To be truly accepted at the top table, procurement needs to communicate in the language of its peers in the business. Specifically, that means avoiding defaulting to a narrow focus on savings and process and rather seeking to define itself by what is important to its business.
That is not to say savings related activity is not important, but it needs to be put into context of the wider objectives of the organisation.
For example, a strategic lever for a business might be to grow revenue in a sector by bringing an innovation to market. Procurement should recognise in this case that it can best provide support by approaching the supply market with an investor mindset, trawling the globe for new start-ups to invest in and collaborate with in product development.
Going to those start-ups with an onerous RFX to fill out will unlikely result in any strong partnerships because those start-ups don’t have the capacity or knowledge to put themselves through such an approach.
Finally, the future of procurement will need to have a strong technology element to become a more effective function. Whether procurement leaders go for an end-to-end solution or a best of breed approach by building an ecosystem of tools best suited to their organisation, understanding at a basic level how technology is built, and how it integrates with other tools, is essential in being able to make good long-term investment decisions.
Historically, procurement leaders have never needed to be digitally literate in this way, however this will need to change as businesses become ever more reliant on technology and need to make long-term decisions on what to purchase.
It is therefore incumbent on the procurement leaders of tomorrow to educate themselves on the digital terms they use, latest trends and not to just limit themselves to the procurement sphere in the search for that knowledge.
Looking at other functions and sectors to understand how new technologies are being applied can help develop digital procurement strategies and roadmaps that are a step ahead of the competition.
Hone these Skills to Thrive
To become a more effective function and to elevate itself in the business, procurement is going to need people with a different skillset from today. A strong focus on soft skills is essential, but so too is an understanding of business more broadly than procurement’s traditional priorities of savings and process.
Being able to successfully digitalise the function will require people who understand not only how to use technology, but who are also able to make long term investment decisions. Procurement functions that recruit, train for and retain these skills are likely to find themselves at the centre of business change in future.
Download our research report, “The Human Factor: Strategic procurement and the leaders of tomorrow”, here.