AS I scanned the list of topics that Procurement Leaders will focus on in 2016, it occurred to me that there is a deeper logic tying together what at first appears to be a varied assortment of interesting subjects – among them, skills and talent development, innovation and the proper place of outsourcing in the function’s toolkit to deliver value. Great nuggets for conversations?
Yes. Interrelated aspects of why procurement can shine as a development lab for operations more broadly? Certainly.
I have often joked with my colleagues that procurement chased me down. In my younger days, I had always dreamed of being an international trade lawyer or even a technologist, but got caught in the procurement net. As it turned out, my career in procurement has allowed me to be those things and more.
At my first law job out of school, procurement sounded like a bum rap. No one was interested in negotiating a technology licensing and integration services deal because it was not that big and we were all public trade law types. “Why don’t you do it? It’ll be a change,” my boss enthusiastically
suggested. As the last in, it was the dog’sdinner assignment I could not refuse. So, I read up around the subject as best I could. I quickly realised that I needed to understand how the technology worked – otherwise I wouldn’t be any help in getting the licence terms right before structuring the design and implementation contract. So I went and saw the equipment in action, asked lots of questions and did my best to see where performance was both good and bad. This I did with an eye toward negotiating into the agreement as much detail as possible about our requirements and the objective measures we would need to avert any disaster. I came away with the knowledge that one cannot deal with operations as a purely theoretical exercise, which is something I have applied
in both the technology and financial services sectors since then.
The same is true of people. If you don’t know what they do or have been asked to do, how can things improve? Years later, I was asked to “turn around” what had been called a “laggard” procurement function. Building on what I had learned, I had a different perspective and insight into how things could improve. Working with the team, we shifted attention to different elements of previously intractable problems. With a bit of luck and determination – not to mention a focus on where value was being added or missed in the process – we managed to get past those challenges with the help of stakeholders from across the firm. The real problem was that
the team had never had the support to try anything different.
Does that mean no one but that team could have done the work? No, many others could have. Yet, the expectations and directions historically given to “those procurement folks” were one-dimensional and didn’t capitalise on what the team knew, what individuals aspired to and what they were capable of.
This was an example of a procurement team living up to management’s expectations: it was no longer assumed the team were just number crunching process jockeys riding their request-for-proposal hobbyhorses to pick the lowest bids for commodity inputs. With support, encouragement and different key performance indicators, the team strived for excellence in a way management actually recognised.
The catalyst to change those perceptions was showcasing how the team was managing and mitigating supply chain risks while ensuring the integrity of the enterprise every day. That was taken for granted, because no one had tapped into the talents and experience of the group before – much less thought about them as a resource integrated into the enterprise more broadly.
Some of those very same “laggards” moved to other industries, one even stepped in to replace me when I moved on, while the others broadened their knowledge and specialisations within the technology space. So here’s to procurement as an operations function.
Steve Hrubala is global head of sourcing and procurement at The Carlyle Group. This post was featured in Issue 61 of the Procurement Leaders magazine. Subscribers can read more here.
This contributed article has been written by a guest writer at the invitation of Procurement Leaders. Procurement Leaders received no payment directly connected with the publishing of this content.