The People of Procurement: the Unseen Champions of your Business
As business professionals, we all know there is an enormous team effort that goes into the success of any/every business around the world.
Whether it is your local hair salon, a global construction company, a bulk super-store, or even Amazon’s cashierless store, there is a lot of human-created collaboration, strategy, operations and hours put into motion in a successful business.
In a world facing the disruptions of technology, shifting consumer-demands and shifts from traditional business models, it’s easy to overlook the individuals who are out there on the frontlines, every single day.
As automation and robotics breath down the neck of our global population, it’s hard to stop and appreciate the work that’s being done ‘here and now’, rather than worrying about the ‘what’s to be’.
I admit it, I’m guilty of romanticizing coming disruption, but reality often reigns in the dreamer inside of me.
Procurement is amongst some of the most rapidly changing business areas, and maybe for the better. Only time will tell if the coming digital transformation of various business areas, just like procurement, will make for positive outcomes. But, in the meantime, there is still a large population of procurement professionals, strapping up their boots every morning, and doing their darndest.
You, the strategic sourcing champion!
You, the almighty buyer!
You, the inquisitive purchasing analyst!
You, the quality management wizards!
You are the future of procurement. Regardless of the coming technological disruptions, you are the engine behind your company’s success. Technology is simply the vessel in which your competencies are able to shine through!
As Marketing Lead at Kodiak Rating, I’ve met, provided software for, and worked alongside, of a plethora of brilliant procurement professionals who understand what the path towards the future of procurement looks like. But, they all humbly respect that the path towards the future includes a steep learning curve, and a shift in structure and strategy.
Today, procurement controls the majority of spends in most organizations, is responsible for a plethora of product innovation, is facing a rapid adoption of technological advancements and remains one of the most crucial business areas for impacting a company’s bottom and top-line.
These are exciting times for procurement, and if you’re not excited about it you might want to check your pulse, because I’d doubt you’re still breathing.
This is: The People of Procurement: The unseen champions of your business.
Typically purchasing analysts sit towards the bottom of the totem pole in a purchasing/procurement team.
However, “the structure of a procurement group will generally depend on several key factors around an enterprise that is going to order procurement items for a project” (Lewinson 2010).
· Size of the Organization
· Goals of the Project
· Scope of the project
· Purpose of the Procurement Team
· Management Decisions
One way or the other, purchasing analysts (as hinted in the title) function within extremely analytical roles.
Management leans on purchasing analysts to complete the legwork surrounding the analysis of various elements of the procurement process: suppliers’ performance, competition, risk, opportunities, and spend.
This analytical support typically comes in the form of procurement reports. Reports are provided to buyers, category managers and procurement managers, so they can make intelligent decisions regarding future purchases/collaborations.
Analysts are instrumental in the development of a procurement team, considering they are the gateway to data-driven decision-making.
Buyers are the real warriors in the procurement process. They’re typically in charge of the vendor selection process.
Utilizing data and procurement reports, buyers locate vendors (suppliers) in-line with their procurement organizations wants and needs.
Buyers provide an important rung of the procurement ladder considering they issue purchase orders to be approved by procurement or category managers. They’re held accountable as the link between consumer, analyst and supplier. Combining the information available to them, buyers make risk-based decisions — regarding vendors — on a daily basis.
“Professional buyers work with retail sales people to get feedback on how choices they have made responded to the market. This back-and-forth dialogue is important to a buyer’s understanding of any problems the sales force has moving the product” (Princeton Review 2018).
Balancing a mix of internal and external pressures to perform — from a multitude of parties — buyers are truly the middle children of procurement.
Category management, as a function, is defined by CIPS as, “a strategic approach which organizes procurement resources on specific areas of spend” (cips.org)
Having the competencies of a category manager present is useful to an organization-looking to optimize the procurement of a specific material or product area. Category managers are responsible for taking ‘deeper-dives’ into the analysis of particular market areas, in order to fully leverage procurement-based decisions for organizational growth.
A category manager is the closest link there is — in a procurement team — between consumer and an organization’s product selection. They’re responsible for analyzing consumer data, and trends, to ensure that their bottom-line sales will drive top-line revenue at a competitive pace.
Category managers, quite possibly, have the most creativity-driven objectives in a procurement team. “Category managers can come from a variety of backgrounds such as marketing, buying, or insight, and there is not necessarily one ‘typical’ personality that will succeed” (Walander 2016).
With that being said, competitiveness and analytical-thinking are two personality traits that you certainly won’t lack in a quality category manager.
CPO or Purchasing Manager
CPOs and/or Purchasing Managers are in charge of the management of the other listedroles above.
As stated, every procurement team is structured differently, and some organizations have both roles present. Under such circumstances, the Chief Procurement Officer would typically be atop the procurement food chain.
One way or the other, these individuals sit within very strategic-managerial roles.
In today’s structure of the global procurement landscape, CPOs are currently concerned with addressing five major elements as analyzed from Deloitte’s 2017 CPO Survey.
· Top-Line revenue growth
· Overall procurement spend
· Building long-term value and collaboration for the sake of stakeholders
· Digitalization of procurement
· Locating new, young, talent
As procurement transitions into a new phase — impacted by growing external pressures and technological disruptions — CPOs are expected to keep their procurement teams on course. On course, in the mind of many C-Suite management teams, means that their CPOs should be providing value to stakeholders of an organization at every turn.
Some of the primary responsibilities, as displayed in a Spend Matters job description of CPO are:
· “Creation and ongoing value creation with a world class supply base
· Development of organizational procurement strategy
· Creation and improvement of best-practice based processes (e.g., leadership of high-value/strategic sourcing efforts)
· Identification and realization of cost-saving and cost-reduction opportunities
· Selection and management of procurement systems
· Management of procurement staff in (and across) sourcing, contracting, transactional purchasing, supplier management, and miscellaneous internal procurement support activities
· Leadership of cross-functional teaming across other business functions and initiatives
· Budget management for categories under management — and for procurement itself
· Development of benchmarks and scorecards to be used for continuous improvement” (Spend Matters 2016).
This post has provided a generalized outline of the quintessential roles of a procurement team.
With that being said, I’m not here to throw a blanket over organizations globally, or generalize the roles of procurement.
On the contrary…
I’m here, rather, to pull back the cover and shed light upon the individuals who are driving true value for organizations on a daily basis.
Until next week.