I got into procurement almost by chance. At the time, I was working in research and development at IBM and then got involved with the central procurement team. There, I became responsible for areas such as quality assurance, developing methodologies and certification.
IBM offered me the opportunity to move to the US, where I worked in Gene Richter’s procurement team and learned about the extended enterprise approach.
Working with Gene showed me the impact the function can have in terms of contributing to the profit and loss and being a strategic asset to the company. The extended enterprise approach is the idea that procurement is not just a function but a strategic arm of the business and it should embrace the company’s partners. At IBM, we worked on this vision of convergence between the
company’s strategic needs and the capabilities of its major suppliers. It was an intense period of my working life and one of the reasons I spent 17 years in procurement.
Don’t stay in procurement your whole life. I would balance this with advice to CPOs to move their best talent in and out of the function.
This sets the tone that procurement develops talent and connects it to the wider business. For example, at Sanofi and PSA, I brought business unit heads into procurement, sent one of my team out to be VP of counterfeit and another to a real estate VP position. I have tried to live by this maxim myself, moving to related roles outside of procurement from time to time.
The biggest change I’ve seen in procurement is in terms of the extended enterprise approach, especially early in my career. This change has since rippled out across the industry. Bringing suppliers into the fold has increased the function’s role in a company’s corporate social responsibility programme. Having good partnerships with suppliers is not just about aligning technologies, it can include helping to establish standards for ethics and encourage initiatives, such as green strategies.
I’ve also seen procurement’s voice increase and it is now a transformation agent in many companies. Digital technologies such as artificial intelligence (AI) will play an increasingly large role in the next step change for the function.
Procurement will continue to increase its value proposition – a blend of social, environmental and reputational value in the digital age. Technology is bringing new opportunities and new risks. CPOs will increasingly see their role as managing these risks and leveraging the associated opportunities.
Integration into the business will also be a continuing trend. Procurement cannot operate as a silo; global business services will increasingly play an important role. CPOs must anticipate rather than
resist this. Stealth procurement would be a good way to qualify it: being there in the right place and thinking and planning for it.
AI will also change the role of the CPO. Procurement will become less transactional and have more responsibility for efficiency, efficacy and compliance.
Procurement will not be directly involved in purchases; the user will source their needs themselves, via design solutions that do not have procurement in the middle. This sort of process automation will make companies more competitive but it is also a challenge for procurement chiefs.
CPOs need to be proactive in understanding and anticipating the impact of AI and shaping it with the right processes, tools and procedures; mastering and monitoring it rather than just microcontrolling it. They will always be accountable for these processes, but need to ensure they engineer and build them in the right way.
Jean-Philippe Collin is the former CPO at Sanofi and is a strategic board member, Dhatim
This article originally appeared in PLQ Volume II: Issue II, which focused on how procurement is looking to squeeze more value out of outsourcing. You 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.