What Procurement’s Talking About at the Thanksgiving Table This Year

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Spend Matters has very special powers.

We were able to travel into the future and become a fly on the dining room wall, joining several procurement practitioners gathered around the Thanksgiving table.

What is Procurement mad about this year? What are their concerns? What do they want to see changed? Here are some highlights of Procurement’s Thanksgiving 2017 discussion.

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A  large, long oak table buzzing with procurement folk sitting on all sides. The turkey has long since been dispatched, with only a few undesirable odds and ends left. All the trimmings and sides dishes are in various states of completion. A ubiquitous Polycom-style conference speakerphone is still in the middle of the table, but has been covered with a seasonally tasteful table linen.

“I’m just glad we didn’t get charts on turkey and pumpkin futures,” quips a former head of indirect procurement at a large equipment rental firm.

“Well, I’m p.o.’d that we didn’t get three bids on our turkey,” jokes a procurement VP of a large transportation and logistics company. “When I tell you what the cost per plate is, you’ll understand why.”

“When it comes to cost per plate, it’s all the add-ons,” another notes. “It’s not the turkey.”

Perhaps it was the tryptophan talking.

[Cut to earlier in the evening.]

Cutting Those Costs

The turkey glistens, the cranberry sauce retains a satisfying jiggle and the green-bean casserole has been cut from the menu entirely – cut as swiftly as the costs in any procurement organization worth its salt.

Inevitably, conversation turns to cost savings over other measurements of procurement’s value. One diner mentions that one of the largest challenges facing his organization is rethinking savings KPI targets, which have not changed in roughly 100 years and are still focused on cost-reduction type savings. With potential inflation looming next year, concerns remain that savings targets keep going up while failing to measure true cost of ownership.

Cost savings is still king, muses a former procurement head of a beverage distributor, but really, it needs to be a product of everything else procurement does.

Someone ponders: But what about cost avoidance? And what about benchmarking to the market, rather than simply focusing on year-over-year cost reductions?

Take it and use it if you can prove it, seems to be the sentiment for the former.

Regarding the latter, we’ve tried benchmarking, others say, to certain degrees of success — taking a closer look at labor-based areas of the organization’s expenses, for example — but often, firms are ‘hardcore’ on the year-over-year improvement view.

Truly, these are debates that may continue forever, several diners agree.

The mashed potatoes make the rounds.

Supply Risk Management

Most are working on their first helping, each chewing over their own cost savings issues in their mind as they chew on the prime flavors of the autumn season in their mouths.

A different worry arises.

After the recent hurricanes, not to mention earthquakes, tornadoes, floods and other recent natural disasters, a director of sourcing for a health services company pipes up: there is very little visibility down his supplier tiers. Focusing on risk management and reshaping his supply base is a priority in the coming year. Any firm that has very specific or delicate sourcing needs is likely thinking about how to manage their supply and supplier risk — or should be.

Several diners nod in agreement.

There is mention of starting up a game of Risk, perhaps after dessert.

Millennials!

The libations keep flowing.

With second helpings under their belts, but the tryptophan not having set in quite yet, the diners quickly become afflicted — as they often do — with “millennial-itis.”

Someone brings up an article they read on the Top 20 Hottest Jobs in the U.S. and, amazingly, procurement manager was one of them!

But procurement becoming the next hottest profession does not a panacea make. A flag is raised at one end of the table — organizations are facing significant turnover and losing talent, which some diners have seen happening especially acutely over the past year.

Alas, workforce participants aren’t looking for the “forever” job anymore, some sigh. With entry-level tasks and even entire positions becoming automated, and upper-level human resources more scant to provide training, mentorship and a wholesale envelopment of new recruits into existing company cultures, it becomes even harder to retain younger employees.

Millennials aren’t the only issue, one diner perks up. The other end of the demographic spectrum can also cause trouble, to the tune of being resistant to learning new technology, for one.

Younger workers don’t seem to have the “old-school” skills coming out of academic programs anymore, some lament. After all, learning how to negotiate on the phone or in person with a vendor is not as easy as figuring out the latest e-sourcing tool. The main challenge seems to be getting the young and old(er) training and working together more collaboratively. But how?

The question lingers in the air as heavily as the smell of the impending leftovers and hearty conversation, begging it to be resolved… perhaps Christmas?

For now, the Risk board beckons...

… “I’m just glad we didn’t get charts on turkey and pumpkin futures…”

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The above conversation is based on and condensed from an actual discussion Spend Matters has had with a group of procurement practitioners recently.

Add to the Thanksgiving conversation – what are you or your procurement organization talking about this holiday? Leave comments below!

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