Proactively driving value, harnessing technology and finding solutions to the challenges facing 21st-century business – CPOs of the future will have a lot to live up to…
Procurement in the future is going to look very different from how it looked in the past. This is due in part to the changes in technology mentioned earlier, and also because all business areas will have to deal with new challenges arising from broader trends and global issues such as disruptions from climate change, resource scarcity, an ageing population and skills shortages.
Meanwhile, the current political landscape around the world is in a state of flux. On top of that, both consumers and the workforce are changing, as millennials start to take centre stage.
To cope with these multiple challenges, procurement will need to continue to become more central to business strategy. “Companies that have seen how much value can be driven from good procurement practices will need to continue on that path,” says Jon Howell, director of operations performance at Ayming.
Perhaps because it will help this transition, procurement executives clearly recognise the value of up-skilling in procurement: people and skills development is seen as the top priority when it comes to making procurement teams more effective, especially in transport and logistics (91 per cent), retail and technology (both 94 per cent). By contrast, in manufacturing just 64 per cent emphasise it.
Respondents also recognise the need for procurement teams to become more professional, by improving processes and communication. Procurement needs to evolve to give businesses the services they require. It needs to establish the right channels of communication with the rest of the business – and it has to do this proactively, rather than waiting for approaches from other departments.
Training and skills development programmes must be tailored to ensure that they allow staff to use the new tools and systems that respondents say are crucial to increase procurement’s ability to deliver value. These tools and systems include advanced analytics platforms and electronic data interchanges that provide real-time information, as well as new developments such as artificial intelligence and big data.
But as procurement becomes more strategic, less tangible skills will become more important as well.
“Many of today’s procurement teams would be very recognisable to Charles Dickens,” says Paul Alexander, EMEA director of indirect procurement at BP. “The new procurement needs to be informed by real business needs and to engage with the rest of the business in a way that is more appropriate for the 21st century. No longer will people be able to hide behind the process they employ. We need people who can translate complex business needs, be a critical friend to the business, be magnetic, charismatic and engaging – words you wouldn’t necessarily expect of procurement teams. Increased automation, ironically, puts a premium on inherently human skills.”
The new CPO will need to be more flexible. They will need to be bridge-builders, good communicators and good salespeople so they can sell the procurement team in-house, says Howell. “They need the right mix between hard and soft skills. CPOs will have to be able to come up with solutions, rather than just highlight problems. They need to shed the road-blocker perception and continue to become facilitators.”