Hot Topic – What Do We Want To Be Famous For?

As part of our Hot Topic over the summer, the Future of Procurement, we have been inviting readers to submit their thoughts. So we are delighted to publish this post from David Feavearyear, VP Indirect and Technology Procurement at Pearson. 

It’s almost impossible at the moment to avoid talk of disruptive technology - from robotic process automation to artificial intelligence – and most businesses and functions are looking at how to get ahead of the curve and stay relevant in an increasingly digital world.

There’s a lot of debate about how pervasive the resultant change will be, which technologies will be most transformative and which will fall into the trough of disillusionment! However, what is almost undeniably true is Justin Trudeau’s statement - ‘The pace of change has never been faster and will never be as slow again’.

You can debate timeframes, but, it is a fact that in the future people will spend far less time performing tasks which are more efficiently and effectively performed by machines. So let’s take that as our starting premise: if an activity can be reduced to a series of broadly repeatable tasks, it will eventually be automated. What does that mean for the future of our procurement function – what will be left? What is it that our future function will be famous for?

Let’s start by talking about what it won’t be. It won’t be running sourcing processes – RFPs, RFIs and ITTs. It won’t be negotiating standard terms and conditions. It certainly won’t be back-office Purchase Order administration (including supplier onboarding and basic risk assessment) and dealing with routine supplier queries.  It may not even be about identifying innovation and continuous improvement – why not just build a platform to take receipt of ideas, assess and triage? Once you eliminate all of that – what is left?

In the commodity space, probably, not a lot! It’s easy to imagine that the entire process becomes automated – from negotiation (to the extent that it will even be necessary) through to delivery, receipting and payment. Hard to imagine where any real value would be added by human intervention, particularly with the increasing advent of market places and comparative analytics. Resources will be required to set standards and oversee governance, but they are likely to be limited in nature and operational in outlook.

However, the procurement of complex services and strategic relationships (both internal and external) is likely to prove more difficult to replace. In the case of the former, it seems highly likely that there will continue to be a role for people that are able to strategise, build consortia, translate business requirements into outcomes and build effective, trust-based relationships both internally and externally.

There’s equally likely to be a role for individuals who are able to troubleshoot post-contract, to mediate between misaligned expectations and to hold both internal and external stakeholders to account, to ensure that business outcomes are actually delivered.  The ability to extract tangible value and to create strategic alliances is likely to continue to be a differentiator for organisations.

In this space the old adage that ‘people buy from people’ is also likely to continue to hold true. The ability to build relationships that enable the business to create competitive advantage by being able to extract more value and move faster than the competition will continue to be important. As will the ability to understand deals from a 360 degree perspective, taking into account operational, technical, financial, legal, sustainability and HR factors.

When describing what’s left of procurement, you’ll note we’ve switched from talking about a function to talking about individuals and skill sets. The reason for that is simple – everybody wants to perform these activities and equally importantly many believe they are good at it! The ability to excel at these disciplines is at the heart of what makes a really astute business person. So why would this activity be the exclusive domain of a “procurement function?”

The reality is that there is no inherent reason why procurement should lead the charge in these areas, other than where there’s recognition from the business that the function has the people best suited to execute.  So here’s the question – does it have those people?

We think the answer is “it depends”. If organisations get ahead of the curve, embrace and even accelerate the inevitable automation in areas procurement has traditionally been responsible for, it will enable leaders to think differently about the talent that they want to attract and nurture. Procurement needs to be relevant to its stakeholders, to think about outcomes and influence rather than process and mandate. It’s a different skill set, less process and more judgement based. I heard a great quote at a conference recently: ‘if you don’t like change, you will like irrelevance even less’. It is very true.

The digital future is hugely exciting and it will be something that many embrace. However, as a function we need to think about whether we get out ahead of the curve and help shape it, or whether we resign ourselves to becoming increasingly obsolete. It is up to all of us to shape the future and to determine what we want to be famous for!

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