The Future of Procurement – Part 1, A Quick Wander Through the Past!

We welcome another two-part guest post on our summer hot topic of the Future of Procurement – this is from Alan Haynes, who describes himself like this – “I am a seasoned procurement professional who wants to see the profession grow and thrive into the future, and passionately believes we need to start our change journey now so that we may create our own destiny.”

Much is being written about the future of procurement. The rapid pace of technology innovation and invention is re-shaping, not just procurement work, but all forms of work across all industries and functions. A future where technology undertakes work at many different levels leaves everyone wondering what the future look likes.

But a discussion about the future cannot be held in isolation to understanding the past. So, what is our past and how have we arrived at our current state?

From a historical perspective the Chartered Institute of Procurement and Supply (CIPS) was first established in 1932, whilst the Institute of Supply Management (ISM) was established in 1915. As a profession we have a long and credible history. By way of comparison the Chartered Management Institute (CMI) was established in 1947, and the Engineering Council was established in 1981.

I first came into the profession in 1976 and have remained in the profession ever since. Like many I have seen many changes moving from paper based manually intensive systems to the current state of automation with less human intervention. In my early times we were very much the traditional purchasing people – in the background writing up purchase orders, adjusting inventory ledgers and being very tactical and transaction oriented. Images of cardigans, sleeve protectors and visors readily spring to mind!

The advent of new small computers, in the 80’s, brought significant and extensive changes to the way work was completed. Suddenly machines were doing the work of many and data was spewing forth like a Hawaiian volcano. Business was also being affected by economic downturns and costs needed to be driven out of business. I don’t know when the transition from purchasing to procurement actually started but my recollection was that this did not start to occur until the 90’s.

Another revelation was the publication in 1983 by Peter Kraljic of the Kraljic Matrix; a concept that was wholeheartedly devoured by the profession. At last someone had been able to define a way of looking at your supplier base from a perspective that the whole business, not just the procurement folk, could understand. For me, when combined with the advent of computing mobility and the economic circumstances at the time, the Kraljic Matrix propelled the procurement function forward.

Over the years that followed the procurement function was able to introduce an extensive range of processes and procedures, cheered on by some from the finance profession who saw procurement as a way to solve some of their problems - especially in what is now known as the procure to pay process. We gorged on processes and procedures, we continually introduced new ways of conducting business and eventually we came to be known as the ‘business blockers’ the police and other less than generous sobriquets!

Sure enough, as we have often done in procurement, we introduced yet another ‘new’ methodology; the retail sector used something called category management, we should adopt it and use it in procurement. So along came category management with all its good intent. History repeats itself, procurement takes category management to heart, and before you know it we have policies, processes and procedures aplenty and along the way we manage to damage our credibility again with self-imposed bureaucracy. I was working with one global company where the category management slide pack comprised over 200 slides – hardly conducive to getting the business on side and cooperating.

During the late 90’s and through the mid 00’s I noticed that procurement as a function appeared to be adopting somewhat of a personality cult. CPO’s et al started appearing in publications proselytising how their approach had created millions of additional value, how savings were being squeezed out of every nook and cranny.  Then CIPS came out in 2010 with their view of how a best practice procurement function would look like; and there in the middle of the list was ‘Having a seat at the table or reporting to someone who had a seat at the table’. The ego had landed, and no business could operate without procurement. A belief still held by many today.

The procurement profession has opened the eyes of many in business (I define business as anyone undertaking ‘commerce’ in both the public and private sectors) to the importance of managing suppliers, and the associated cost base. The management of suppliers is now an essential part of nearly all businesses and this will continue into the future. The procurement profession can be proud of its achievements and the considerable value that has been added to society as a whole as a result of their efforts. But now is not a time rest on our laurels.

Our history is littered with an enormous amount of good intent and has created a credible function that now needs to look to the future, if indeed it is to have a future as a standalone profession.

(Look out for Part 2 tomorrow!)

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