Six skills for future success in procurement
“The role of procurement within global companies has changed dramatically over the past 25 years from that of simply buying goods and services to overseeing an integrated set of management functions. Procurement has grown up,” said a report in Harvard Business Review.
Elaine Porteous, procurement consultant and freelance writer, spoke at a recent Dow Jones “Expert Series” event outlining the skills required to excel in procurement. We summarise the key points in this month’s SmartProcurement.
1. Risk, governance and compliance
In procurement, knowledge is power. Know your suppliers’ risks so you can mitigate them. Know that your organisation’s policies and procedure are there to guide you and follow them.
Manage relationships with suppliers to ensure their compliance to agreements and contracts. Offer all competitive suppliers fair and equal consideration.
2. Total cost of ownership (TCO)
Understand TCO and apply it. In any strategic sourcing initiative you will need to calculate the total cost of a commodity’s lifecycle. Acquisition costs. Running costs. Disposal costs.
Become an expert on Should Cost calculations.
Brush up your technical analysis skills.
3. Global supply market intelligence
Understand the market from which you are sourcing. Know your suppliers’ suppliers.
However, realise that markets change, and it is therefore essential to continually gather intelligence and track commodity prices.
There is a lot of information out there. Some of it is a lot more useful than the rest. Search and select the best research resources and tools.
Cross-functional teams and stakeholder management are keys to successful sourcing projects. Stakeholder management will be a key differentiator for an individual’s success in procurement. It is an art, not a science.
But the next level is being able to lead the team and allocate roles, which can make or break a project.
5. Influencing and persuasion skills
An ability to develop insight and understanding of the other person’s state of mind will help you in negotiations and when making your case to the board. Show more empathy, listen more, talk and tell less.
Build relationships across geographies using cultural and language skills.
6. Change Management
It is an accepted ratio that 20% of people in an organisation will embrace change, 60% will go along with it and 20% will outright reject it. So, put your efforts in to the last 20% to save you time, money and stress.
If your key stakeholders are in the bottom 20% who don’t embrace change, ignoring them would cause aggravation and a poor result.