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In this, the second in a series of blogs on complexity, Procurement Leaders invites Optimum Procurement’s Peter Rushton to look at why chiefs shouldn’t be blinded by the availability of data and need to keep focus in order to tackle complexity.
No one can deny that the world has become more complex over recent decades. As a consequence of digitisation, the interconnectivity between people and things has come on in leaps and bounds. Crowded networks now define our technical, social and working worlds.
As technology has become powerful enough to capture and describe complexity, the exponential increase in computing power coupled with progress in mathematics and statistics have propelled us into the era of ‘big data’.
Big data is a seductive notion for business and procurement people; that this thing growing faster than anything in volume can be harnessed and analysed to answer burning questions on how to reduce costs, enhance competitiveness and achieve profitable business growth. And yet the prospect of machines decision-making is pretty unnerving. For that very reason if big data is to succeed it will require one thing from us, its users, and that is the ability to focus and achieve understanding of the complex situations the data serves to address. How many models designed to predict ‘future’ states of complex systems from the weather to economics fall short on accuracy?
In fact, our ability to consciously recognise the existence and make up of a complex purchasing environment will help us to apply tools, technology and evidence more effectively, driving stronger outcomes to more easily calibrate the impacts of globalisation, intricate markets and cultural change on our supply chains. Essentially, while merely analysing the complexities of spending may allow us to make satisfactory cost savings, analysing and understanding these complexities will allow us to address the strategic challenges and opportunities we face in business.
To evaluate complex scenarios effectively however, we must have time for absolute focus in visualising and planning our approach to and execution of procurement strategy. As any professional sport shows, the ability to truly get in the zone brings outstanding results.
By being able to successfully focus on and understand complexity, procurement has the potential to become the most important enabler of cost-effective growth for organisations. An example of success in understanding complexity is the way in which some procurement teams have moved at pace into growth markets, bridging cultural gaps and creating competitive advantage through their proximity to the supply base.
Developing a global market intelligence capability to identify the procurement hot spots in turn shapes corporate investment decisions and new market development activity. Thinking puts procurement at the top of its game, creating significant value supported by genuine business ROI that senior decision makers crave from our profession, but which all too often stops at two-dimensional cost savings.
The ability to focus and understand complex purchasing situations is emerging as one of the most important skill sets for the contemporary procurement practitioner to deploy, not least as it is often the one in shortest supply.
This is especially true against today’s backdrop of increased ‘noise’, the demand to communicate and access to data as a decision-making support. These tools are essential assets but the power to think, visualise and define the road ahead ourselves is irreplaceable.
Peter Rushton is CEO at Optimum Procurement.