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In early November, Procurement Leaders brought together the leading minds in the Asia-Pacific region to try and map the future of the function.
Gathering at the St Regis hotel in Singapore, the Asia Pacific Procurement Congress 2018 focused on the transformation of the procurement function into a gamechanger for the business at large. We often hear CPOs state their ambitions to deepen the role and impact of the function. In fact, the community is nearing a consensus on the future of the function: a highly automated service whereby a core of talented procurement professionals manage relationships, innovation and value.
However, few organisations are there and fewer are taking practical steps to try and make this vision a reality. If the function is to broaden its reach and engender the principles of a value-creator, it must change the nature of the game. This needs to be led by the CPO and cascaded into attitudes held by the wider team.
A number of insights came out of the Congress around how some CPOs are beginning to move the needle here, which showcased how functions are moving in this direction.
Amitava Bakshi, CPO at Tata Steel, outlined an exciting future in which his function enjoyed a wide array of responsibilities. He said the new mantra for procurement is “creating value, analytics enabled discovery, robotic process automation and socially responsible procurement”. But, he warned, there are many hurdles in the way of achieving this with “75% of buyers time still subsumed by firefighting activities”. If the function is to move to this new future, CPOs must lighten buyers’ nonstrategic loads. Bakshi said.
Arnd Hirschberg, CPO at Siemens Process Industries and Drives division, predicted a future where the function was less attached to its processes. Many buyers, he observed, take comfort in processes and control as a panacea to meet internal needs. But, he explained, internal stakeholders are less concerned by the input, they are mainly concerned by the output. If buyers understand this they will be able to deepen their value to the organisation.
Victoria Folbigg, VP procurement at Zuellig Pharma, struck a similarly pragmatic tone. It has been well documented how most people see the future of the function in supplier-enabled innovation, but we also know that innovation comes from all directions. As leaders, Folbigg argued, CPOs must build teams that are nimble enough to seize the opportunities as they occur. By placing all the innovation eggs into the strategic procurement basket, you may actually miss out on other ideas, she explained.
Jorge Juan Munoz Fernández, head of strategic sourcing and transformation at Maxis Berhad, argued that transformation requires continual partnering and valuation creation by procurement for the business. “Saying you are a business partner”, noted Munoz Fernández, “moves you further away from actually working closely with the business."
These insights present a challenge to the function. Buyers are naturally uncomfortable with the regularity of processes and plans. These behaviours hinder the evolution of the function. But, CPOs must also be a little more introspective about the trajectory of the function under our care.
Without direction, buyers will continue to pursue opportunities that are savings-oriented. This is a result of the environment in which they work (key performance indicators, organisational structure, team activities, and so on) all of which are under the remit of CPOs to adjust. But a cost focus is also a legacy mindset. It has been ingrained in them for decades. If leaders truly want to pioneer into the value-creation age, they will need to challenge and adapt the attitudes of their team.
This will not emerge unless CPOs also challenge themselves to do something different.
This article is a piece of independent writing by a member of Procurement Leaders’ content team.