All posts by Simon Whatson

A New Skillset for Procurement Leaders

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.

Photo by Chevanon Photography from Pexels

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.

Digital Literacy

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.

Procurement Needs the Human Factor

Procurement is evolving and developing and leaders have a chance to create a function to meet all an organisation’s future needs. But first they need to remember the importance of the human factor.

human factor
Photo by Min An from Pexels

Procurement leaders now have an unprecedented opportunity to be the architects of a new function that puts customer satisfaction front and centre. This is a function enabled by technology whose value proposition goes beyond mere cost savings, and becomes central to business’ ability to gain a competitive advantage and deliver shareholder value. Delivering this shift will require a complete realignment of the traditional procurement skill-base and a whole new operating model.

Our latest research study, “The Human Factor: Strategic procurement and the leaders of tomorrow”, surveyed 500 senior procurement leaders including CPOs and CFOs worldwide, to explore this new shift in the procurement operating model, as well as the expected skill-base required to prosper in the future world of procurement.

Here are some of the significant findings.

The Operating Model of Tomorrow

We’re seeing a growing acceptance in the industry that things need to change. Procurement leaders are starting to acknowledge that in order to develop and elevate their position, procurement needs to become more relevant to the business and suppliers it connects.

In line with this, our research found 53 per cent of procurement leaders to have revamped their procurement operating models in the last 12 months, rising to 80 per cent in the last three years. 46 per cent listed ‘structure’ as one of the top three aspects they had recently revised.

However, in our view, the new operating model needs to go beyond a change in roles and responsibilities, or a restructured department. It needs to be people centric, with a focus on enabling the optimal interaction between those people and the right mix of technology, insights and expertise.

To get it right, first consider what information the people in the organisation will need, when they will need it, how they will access it and how it will help them serve their customers better.

Significance of Soft Skills

Taking a step away from traditional procurement training, ‘soft skills’ are becoming increasingly important for future procurement leaders. A ruling 78 per cent of our survey deemed them to be either essential or very important to the role, with the ‘ability to influence and lead’ ranking as the number one ‘soft skill’ to possess – reflecting a clear shift in focus for the new operating model.

The study also found ‘Flexibility and agility to manage ongoing change’, ‘Courage to challenge conventional thinking’ and ‘innovation, creativity and problem solving’ to be among the top valued soft skills by respondents. In our view the expectation is clearly for future procurement functions to lead business change, challenge how they’ve operated to date and adopt a more project-based mentality with an agile approach, in order to better meet the needs of the business.

Mind the Digital Skills Gap

As society is growing increasingly tech-savvy, it’s no surprise that digitalising procurement processes and systems topped the priority list of the leaders in the industry. There is an understandable temptation to buy gadgets with the belief that spending money on software will afford a competitive edge.

However, our study revealed over a third of leaders believe that new technologies are not supported by the right processes and skills, a quarter say there is a false expectation of technology in the field, and 15 per cent feel there is a lack of adequate talent which prevents procurement from realising the true power of technology.

In order to benefit from technology, procurement leaders need to understand the impact of that technology on their workforce, the new and different skills that will be required, and then figure out how to bridge the gap. However, it seems that procurement is starting to address this as two thirds of respondents indicated that they have already taken steps to tackle the talent pipeline shortages and skills gaps in their functions.

The Future of Procurement Learning

With the procurement landscape changing so rapidly, adaptation is necessary and key to enabling this is training.

Learning and development opportunities were recognised by the industry leaders surveyed as the top method for retaining talent, so why did 94 per cent fail to have a structured approach to training in place across all levels in the organisation?

Providing such a programme is a vital way to up-skill employees in a cost-effective manner, while also playing an important role in attracting prospective, highly-skilled talent.

However, our research reveals 79 per cent of leaders believe procurement’s approach to training needs to change in this regard, showing there is clearly a gap between what procurement leaders believe is needed, compared to what is actually being implemented.

A structured approach to training ensures the knowledge, skills and competencies developed can support the strategic development of the function and wider organisation beyond it. In our view the best way to deliver this training is to have the recipient in mind, first grasping an understanding of how they will consume the training, to then design and deliver it accordingly.

Generation Z and Beyond

As the younger, more digitally native generation enters the workforce, businesses need to overcome and engage with the different attitudes that Millennials and Generation Z hold. From misconceptions about the value of the procurement function, to misplaced expectations about how technology should work, procurement leaders need to address these preconceived beliefs and position the function in a light that will attract these new workforce demographics.

The study shows a clear divide in what organisations believe to be the best way to attract and engage this young talent. A quarter identified salary and remuneration to be the key factor, 21 per cent believed it to be procurement’s role in sustainability and CSR, and a further 20 per cent ranked additional financial benefits top of the list.

Organisations clearly have an idea of what matters to the next generation of leaders, they just need shout about it more loudly.

The Human Factor – Moving Forward

The future procurement operating model is looking to embody a digitally literate workforce with strategic minds and an abundance of soft skills – a step change in requirements from ever before. Attracting this talent is a challenge, but this is the future of procurement.

Procurement needs to create a culture that enables an inquisitive mindset, but one with the confidence to challenge constructively, both internally and externally. It needs structured training programmes to empower employees to develop real, transferable hard and soft skills, but places heavy emphasis on the importance of self-learning and reinvention in an era when knowledge has never been cheaper.

It’s vital that procurement leaders confront this change challenge head on and in doing so, they will not only realise procurement’s full potential as a value creator for the company, but also to ensure its continued existence as a function.

For too long, procurement has been characterised as the “process policemen” or “final price negotiator” – charges it would like to deny but often lives up to. To become more effective in the future, procurement leaders need to build this new, technology-driven, skills-enabled procurement operating model that really values the human factor.

Download the full “The Human Factor: Strategic procurement and the leaders of tomorrow” report, here.

Efficio is the world’s largest specialist procurement consultancy operating across ten offices in Europe, North America and the Middle East. Efficio works with clients to identify, deliver and sustain improvement opportunities in procurement. Their international team combines unparalleled procurement expertise and industry experience with a unique blend of intellectual capital and technology to deliver results and advance clients’ procurement capability.