Dinner with Zycus and Peter Smith – Discuss The Future of Procurement

We all know what a success procurement has been over the past 20 years or so. That is not all because of the brilliance of those of us who have worked in the fielded for that time, much as we might like to think it is. Certainly one external factor behind the growth of the profession has been the growth in the proportion of organisation's cost base accounted for by third-party spend, rather than internal staff costs.

This excellent Proxima study last year calculated that, on average, some 70% of organisations' revenues went out of the door to third parties of some sort, compared to just 13% going on staff costs. Now I don't know exactly how that has changed over the 30 years I’ve been involved with procurement, but we can be pretty sure it has grown considerably (I would guess that 30 years ago it would have been around half the 70%).

So procurement has obviously benefitted from this, as our role has grown alongside that expenditure. But that cannot be replicated over the next 30 years; we might see the 70% grow slightly, but it is probably close to its maximum now, we would suggest.

That is just one reason why I believe that procurement must take some different approaches if we want to succeed over the next ten years in the way we have over the last 10 or 20. Does that mean pursuing a "licensing" route for the profession, as CIPS is arguing? Interestingly, last week I heard for the first time a real live PO arguing passionately for that approach. Or will technology change everything anyway in terms of the procurement role and our interactions with other parts of our organisations?

Those are the sorts of issue I'm going to be discussing at the Zycus CPO Connect dinner, next week on November 25th.  “Securing the future of procurement – making sure the next ten years are as successful as the last” is the title. I guarantee to provoke some debate,

Dinner is being held at the very pleasant surroundings of the Gordon Ramsey Maze restaurant in Grosvenor Square, London, from 6pm on November the 25th. As well as me talking (no more than 15 minutes, I promise), there will be a chance to debate the issues with senior peers. If you’re a senior practitioner, there are a few places left and you can register here - I hope to see some of our regular readers and friends there.

Voices (5)

  1. Bitter and twisted:

    Aren’t all costs ultimately either labour or rent?

    1. Secret Squirrel:

      I’d argue taxes too….but you could convert that to the payment of someone else’s labour and rent…..

      1. Dan:

        And the money that ultimately ends up in off-shore bank accounts…

  2. Ian Heptinstall:

    Hi Peter, whilst I agree that the Proxima work last year is great,

    I’m less sure that the amount represented by suppliers has increased that significantly over the past 30 years. I remember it being “around 2/3” when I attended the CIPS/PMMS PPS workshop 20 years ago, and my well thumbed copies of books by Dick Russill and Steele & Court from that era say the same… as did McKinsey Quarterly in 2001

  3. Ian Heptinstall:

    Hi Peter, whilst I agree that the Proximal work last year is great, I’m less sure that the amount represented by suppliers has increased that significantly over the past 30 years. I remember it being claimed as 2/3 when I attended the CIPS/PMMS PPS workshop 20 years ago, and my well thumbed copies of books by Dick Russill and Steele & Court from that era say the same.

    Ian

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