P@29 - The future of Procurement: progress from Art to Science

 

A colleague, Antonio Ariza, often says that Procurement is unfortunately more Art related than Science based. I agree with him. And there is today a direct link with the level of performance and the bright future of our function.

In the early (19)80´s, Kraljik and Porter developed 2 key tools for Procurement: Portfolio analysis and  5 Forces analysis. 35 years later, few companies are using them on a regular basis and several gurus have rightly created more updated approaches. Sourcing process, e-auctions, category management are now 20+ years old and there is still plenty of room for improvement in term of general deployment, appropriate use, and simplification. Some experts tell us that, for many good reasons, CatMan should be replaced.

Among our community, we are still not clear on what SRM means as we can choose among the following definitions: 1.- the Procurement IT tools and solutions (the worst choice), 2.- the whole process of selecting, tiering and managing the supplier panel or 3.- the way to specifically manage the strategic supplier relationships. Referring to the third option, experts have recently thought of a new branding and deeper collaborative mindset like Collaborative Business Mgmt., Trading Relationship Mgmt., Global Account Mgmt., Vested model, Return On Relationships, etc…

We can now find quite many other tools, solutions and Procurement (BPO) services that are punctually or partially applied.

With old concepts, tools and processes not fully implemented, with new services, applications, approaches under development and/or slow ramp-up, and as we still have a fragmented and rather weak worldwide Procurement community, it seems obvious that we can do better at sharing ideas, concepts and adopting standard naming, processes and tools.  We can do better at harmonizing, deploying and improving our ways of working.

As more and more companies need to co-create or simply get more value from their supplier network, Procurement has a key role to play. Buyers should become (select just a couple of them):

-       The guardian of compliance, ethics, corporate brand

-       The body guard of spend efficiency, productivity, EBITDA

-       The golden sponsor of sustainable business practices

-       The Captain of innovation

-       The best fan or supporter for sales and marketing

As Emmanuel Cambresy, a good colleague, wrote, we will necessarily tend to transform ourselves into integrators, business relationship builders, value architects.

Our community will make this possible if we are able to have a much more coordinated approach by sharing and working on defining and implementing a much more scientific function.

As to me, it means becoming more rigorous in 7 different fields:

-       From understanding to analyzing our environment, the impactsand the business imperatives

-       From talking to defining the Procurement ValueContribution for the company and selecting the appropriate Procurement operatingmodel

-       From implementing to truly benefiting from compliant, efficient,and friendly user Processes, Systems and tools (incl. analytics)

-       From organizing our resources to properly outsourcing ourProc. activities

-       From complying to driving the  Sustainability agenda

-       From SRM to Global Account Management Program

-       From being reactive and uncoordinated to acting proactively, in an interconnected and immediate manner.

Within the next months, I will share my views on each of those 7 points.

Do you see any other key area we should focus on in order to become a more scientific function?

I invite you to stay connected and contribute.