Some common themes from ISM and Procurement Leaders.
I had the pleasure of sitting in on some great presentations at the Procurement Leaders World Procurement Congress in London, as well as attending the Institute for Supply Management in Nashville. They provided the perfect opportunities to reflect on where Procurement currently is, and where it’s going (hint: agile procurement). It is remarkable how much it has evolved – and what the notable changes are – over the last 10 years.
I came away with three observations which have commonalities across both conferences. I believe these illustrate where the procurement profession has changed, and where it is still slightly stuck.
The easy one first: The demographic of the profession has shifted to become much younger and have more female professional. Now, this could be a sign of my age, but I found this to be quite notable at both events. More importantly, these are very positive – and long overdue – changes, which I believe reflect how the profession has evolved to attract a more diverse set of perspectives in future talent.
Secondly, the need for agility or “Agile Procurement” was a common theme throughout both conferences. In particular, I noticed a trend of moving procurement into a place of influence rather than a function that is always reacting to business needs. There is also a strong desire to shift suppliers into a place of influence where they can have a greater impact on revenue-making decisions.
Agile procurement at work: How Bayer is pregaming the future.
Agile procurement was probably best described by Thomas Udesen, the CPO from Bayer, in one of the keynote sessions. He outlined that, despite recent populist movements, globalization will continue to grow. This point is underscored by the fact that in the next 20 – 30 years the global population is expected to grow to 10 billion. The result will be an increase in urbanization, greater demand on healthcare, and huge impacts on food and jobs. At the same time, Artificial Intelligence, globalization and robotics will be impacting procurement.
Because these are mega-trends, Mr. Udesen and Bayer looked at what the future holds and explored the ways the company needed to change to tackle the coming challenges. He believes it will need different leaders with more purpose, and people that need – and are willing – to take more risks. Bayer is looking for those employees who are willing to go an extra mile. In order to attract such talent, Bayer Procurement transparently and openly communicated about this future. They then set out a goal to be the best. Stripped out complexities and went back to basics. However becoming agile was the key to this plan.
I would like to take it one step further. As mentioned in a previous blog, a more informed approach to supplier management will be a key way we can achieve the agile procurement goal. Furthermore, whilst the trend to focus on the rationalization of the vendor base offers great short term benefits, I sense a growing realization that this strategy is offering diminishing returns over the longer term.
A more informed buyer needs a broader choice of suppliers, and a better understanding of their strengths and unique differences to help build solutions that quickly meet revenue opportunities. Agile procurement practices, people and processes will allow procurement a seat at the revenue table.
Free your mind and your assent will follow.
Finally, in some ways procurement still remains stuck. There seems to be a pervasive element in procurement that suffers from crises of confidence, and that generated quite a few questions during the Bayer presentation. For example, how to secure executive support, which has been a common concern for a number of years.
Again, Mr. Udeson answered this perfectly: you need to align procurement goals with overall business objectives, and build business cases that resonate with those overall growth objectives. Is procurement ready for these changes? Interestingly, he says that procurement lacks of sense of urgency and an understanding of how important it is. That observation has been a common theme throughout my time interacting with procurement.
The world is changing at an ever faster pace, and procurement needs to have agility built into its DNA to help not just meet this change, but drive it effectively. The good news is, the profession is attracting bright and new young talent, the very talent that is well equipped to meet such changes. Good leadership with a sense of purpose and authenticity will help navigate these tremendous challenges over the coming years. And, ultimately, I think Mr. Udeson says it best that as leaders and as contributors, it is important that we believe in something and contribute towards something we believe in.
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