Over the years in procurement, I've often observed two distinct models of career advancement, combining a "don't rock the boat, keep your job" philosophy and a more advanced, "up and out" perspective that more closely mirrors what you might see in a professional services environment. Occasionally there is a slight deviation from this latter model, where a more intellectual (often PhD type) becomes a process, tools and related champion but rarely rises to a CPO role. Still, we can distill the typical career progression in procurement from one of two approaches: steady, limited and safe or career climber.
Career advancement based on these two approaches is often radically different. A steady-as-she-goes type of employee in procurement is most likely to advance a few positions or two beyond an entry-level buyer role, in title if not in specific function, before retirement -- over the course of 25-30 years. They often become a specialist that truly knows how to get things done rather than a true category (e.g., aluminum, steel, copper, resin, energy, marketing, IT, MRO) expert on a world-class level. In contrast, a career climber is most likely to sample roles, almost in a GE-like corporate rotation, advancing on a more rapid basis but becoming more of a manager and champion quickly and less of a doer.
Historically, salary and compensation have rewarded procurement career climbers much more than those who take a steady and safe approach. No surprise there. One could say this for many careers. Yet looking ahead, I believe that we're already seeing some early spend writing on the wall when it comes to a third career path: subject matter expert. This one is largely unique to a handful of professionals (e.g., industry/sell-side analysts in financial services), academia, engineering, etc.
In procurement, this role is taking the form of category experts and category leads, of which we now count at least 500 within the major procurement BPOs focusing on such a model (e.g., Accenture, Proxima, Procurian). Over half of these positions, by our rough estimates and discussions, are earning base and bonus compensation of at least $150K US per year (some significantly more) with material opportunities for income growth without significant management expectations. Compared to CPOs, this may sound low. But we know of some SMEs making in excess of $200K annually with demand for their services creating a market that can also allow choice between maximizing income versus career flexibility while maintaining strong earning potential.
Granted, this is far from what sell-side analysts make on Wall Street make, although in the next two decades, I think the gap will shrink considerably between the two groups (as it should). More important, I believe it will narrow inside the Global 2000 as well. This will happen as an increasing number of procurement organizations prioritizing bringing more senior experts in-house, especially for their larger, strategic categories, including those straddling a supply chain function (where contract manufacturing, make/buy analysis, inventory all factor into total cost consideration) also come into play. However, as our colleagues at MetalMiner will attest to, true senior category experts in the metals area, among others, are exceptionally hard to come by, especially those with an understanding of the global market environment, forecasting, manufacturing operations, quality and related areas.
The role of subject matter expertise (SME) will increasingly take on more responsibility outside of the historical responsibilities of a category lead (e.g., negotiate with suppliers, manage performance). In the area of direct spend, I see SMEs taking on more of an analyst/forecasting/hedging function where a category lead is responsible for maintaining a forecasting and risk mitigation program for strategic materials. On the indirect side, such as marketing, senior category leaders may substitute a deeper knowledge of market forecasting/modeling and hedging with a deep analytics appreciation and understanding to measure agencies of record and third-parties (e.g., media measurement houses) working on their behalf.
In the second part of this post, we'll continue our exploration of the subject, including taking a closer look at how individuals in procurement can become category experts and SMEs as well as how procurement leaders can evaluate how best to identify and prioritize hiring needs for a more senior type of SME based on limited budgets. Later in this exploration, we'll also consider the category expert tools of the trade (including technology, analytics and intelligence/content) and how these tools can often differ from stock source-to-pay solution sets.