Procurement’s future is business transformation

Are you changing your business for the better? It’s a simply enough question and I think there’s a convincing case to say that procurement or purchasing always needs to be able to answer that, yes, it is changing itself and the business in a significant way. If you’re not able to manage change effectively, and always be doing that, you can be sure that your competitors probably are.

Yesterday afternoon, just before a dramatic dump of snow over a chilly London, Professor Richard Lamming and Gerard Cantwell, director of purchasing at Aggregate Industries spoke at a Vendigital Seminar about business transformation.

Coming at it from two quite different angles – Lamming from that of an academic looking at where supply chain functions might eventually be able to take businesses and what procurement is going to have to have in place in order to get there, Cantwell looking at the difficult journey of developing a function to the point where it can deliver TCO savings and begin to offer strategic value to the business.

What came across was that the procurement function is in a fantastic position to deliver change that has topline impact. As Lamming described it, there’s three levels that procurement needs to have in place, and he described these ‘levels’ as broadly a set of qualities that constitute a function’s ability.

There were two things that really caught the attention about these levels – one was the horizon-expanding nature of the third (and final) level. Here a function has transformational capabilities that take in innovation, brand reputation, geopolitical integrity, demand creation and operating strategy – abilities to influence to topline and build business transformation around some of the possible pervasive global trends (think Occupy, think diminishing resources, think biomimetics!).

But while Lamming’s ideas were a reminder of the imperative for change and the possibility for impact if the right thinking and structures are in place, Cantwell’s gave a very real sense of where many businesses are. As he pointed out, he had great support from the board, but they need savings, they had a focus on TCO.

Even when you look at some quite mature organisations, again and again the pressure is on for procurement to go into its supply base and come out with savings. And the sense that you get is that not only are the activities of hunting savings and chasing topline-oriented transformation not always compatible, it requires quite a different function and a different leader to turn a poorly performing team around than it does to turn take optimised processes and personnel and create a platform for true business transformation.

There’s a lot of interesting thinking on where the function or the profession in general is headed next but what will be really interesting to watch, over the coming years is the whether functions are going to have undergo some innovative changes in their own structure, even their own philosophy in order to reach Lamming’s promised land of true business transformation.

“There really is no limit,” he said. If you’re a procurement chief right now, do you see it that way? You might be a procurement expert, but are you a change manager too?