The start of 2011 has seen a debate about procurement’s challenges as the combination of austerity drives and economic recovery converge. Some commentators say the profession risks falling back into obscurity once the recovery really gathers pace.
I share this concern, which was heightened by the recent SM Poll showing that cost reduction remains the number one priority for procurement in 2011. When does the profession make the link to value?
CPOs have enjoyed the spotlight for two to three years now, and have received increased influence as a result. Viewed in this light the results of the survey, which does not even mention making the link to business strategy, are disappointing. With the exception of increased outsourcing and CSR, all the other priorities lay at the low end of procurement’s value chain, which “follow” rather than “influence” business strategy. This clearly needs to change with some urgency if purchasing’s fall back into obscurity and irrelevance are to be avoided. So what is required?
Here are my recommendations:
1. Clear direction. If you don’t know where you are going any road will take you there.
2. Establish an unequivocal link to business strategy.
3. Market the “value” of procurement relentlessly.
4. Engage the business. The key quality required to achieve this is leadership.
Procurement needs brave CPOs who possess the skills, courage and conviction to position procurement in a leadership, rather than support, role and to make the business case to build the required capabilities to operate at this level.
For those of you already working under such a CPO you should learn and absorb as much as possible before carefully considering your next career move. For those of you unfortunate enough not to have a brave CPO, I recommend you find one to work for – why not make it your new year’s resolution? Happy 2011.