There is no doubt procurement has changed immeasurably over the past 20 years. It was once considered a back-office function that merely ‘counted the beans’ and prevented staff from purchasing the things they wanted to buy. That changed in 2008 with the onset of the global financial crisis, however, as businesses sought to both save more money and drive greater value from their supplier relationships.
Although the function delivered on the promises it made and the goals it was set, things are changing again. Technology has now advanced to the point at which the function can deploy intelligent software systems to automate much of its remaining administrative and transactional duties. Businesses can glean greater insight from analysing spend data while blockchain promises to open up global supply chains.
Cynthia Dautrich, the former CPO at global information technology services provider DXC Technology, personal care products manufacturer Kimberly-Clark, financial services firm GMAC and professional services provider Accenture, has seen that change firsthand and recognises the opportunities for procurement that lie ahead.
Dautrich started her career as a chemical engineer at consumer goods giant P&G before moving into management consultancy with AT Kearney, then onto her first supply chain role as director of global supply chain strategy with food business the Pillsbury Company. She has witnessed extensive change in the function over the past two decades but is now looking ahead to the changes that are yet to come.
“Early in my career I moved through a number of supply chain roles, which included manufacturing, operations and distribution,” she says. “I did that because I wanted to get a complete view of supply chain operations. Once I had that experience I moved into procurement with AOL as VP of strategic sourcing, where I really found my feet and loved the part of building tangible relationships both internally and externally.”
Dautrich took that experience and applied it to the numerous transformations the function was undergoing during the early 2000s.
At Accenture, she led a function-wide transformation effort that saw her develop policies, processes, people and technology while at GMAC she created new global operations for procurement, real estate and facilities management. Dautrich then led an even bigger project – creating a completely new global procurement organisation at Kimberly-Clark. Most recently, she led the supply chain and procurement function at DXC Technology. There, Dautrich redesigned the end-to-end supply chain process including planning, sourcing, procurement, contracting and transaction management through digitisation, automation and artificial intelligence. She currently sits on the advisory board for Atlanta-headquartered procurement consultancy firm Insight Sourcing Group.
While Dautrich helped each of these functions to deliver more, she believes new technologies now available to CPOs will create even more value and push the function to greater heights.
“There is still a lot of value that procurement can unlock,” she says. “I believe digitalisation is the key to tapping into that potential – especially around spend analytics, cost modelling and strategic sourcing. There is just so much opportunity to make life easier for buyers, in terms of creating the time and space for them to focus on different things; and also for suppliers, in terms of sharing information and outlining what our goals are.”
Dautrich is convinced about the positive impact digitalisation will have on function’s potential. Having now moved away from procurement to take up a role as an adviser and consultant, she has some sound advice for those individuals who will lead the function in the future.
“Fundamentally, you have to earn the right to implement any kind of change. That means doing the basics of procurement consistently well and proving yourself and your team over and over again,” she says. “You won’t get any investment or support if you don’t earn that right.”
Once leaders secure the support of the wider business, Dautrich says, they will need the capital investment to bring in new technologies. But to do that, they must develop a solid business case.
Building that business case requires procurement chiefs to develop themselves and work specifically on understanding the priorities and goals of the wider organisation, as well as stakeholders, and align that with their business case. This can be a time-consuming exercise and, in the past, there was no guarantee of success.
But technology providers are beginning to develop full end-to-end systems, which strengthens the case for updating old technology. These new systems are beginning to resemble popular consumer platforms, which will help improve adoption rates due to users’ familiarity with these interfaces and their relative ease of use compared with many legacy platforms, as well as the clarity they bring in terms of insights.
Dautrich is confident the function can – and will – successfully move towards this digitalised future because businesses are under greater pressure to do more and are increasingly looking to procurement to help them achieve that.
“Every year, I see the function taking another step forward and that will continue,” she says. “Leaders need to be agile and fast to stay in sync with the business and ahead of the competition.”
This forward progression and the continuing development of skills within the function, she believes, will lead to further benefits, most notably around innovation and collaboration, which will help unlock even greater levels of value.
By implementing familiar systems that both internal and external stakeholders find easy to use, as well as quickly demonstrating its ability to deliver benefits, procurement will find itself collaborating much more closely with other functions and suppliers. That will inevitably lead to new process and product innovations.
The one thing Dautrich thinks could get jeopardise this success is the function’s ability to hire staff with the right skill sets. She is well aware of the competitive environment in which procurement teams operate when it comes to attracting and retaining the best talent. Not only do hiring managers face competition from other procurement organisations, but they must also to compete with other functions, including those within their own businesses.
While it is something that has long been touted as an avenue that procurement should explore, Dautrich suggests CPOs go into schools, colleges and universities to promote a career in the function and actively recruit the brightest talent.
Hiring managers should look for candidates who possess the business acumen that will help their team to develop and strengthen the cross-functional and cross-business relationships that are so valuable to the function, she says.
Dautrich clearly senses the function is at a crossroads in its development journey. Procurement chiefs who embrace the new digital technologies will find a number of opportunities present themselves in terms of savings and value creation. Those who ignore it, however, could set their function – and quite possibly the business – back by a number of years.