If you were under the impression that procurement was merely about purchasing “things” and negotiation contracts, you were incredibly wrong. The procurement professional plays a critical and instrumental role in a company’s success.
There are many misconceptions like this about the entire procurement process: from procurement 4.0 to modern slavery to cybersecurity.
PartProcurer had the opportunity to discuss some industry trends and challenges with Martin Stark, a UK-native, now Sydney-based, seasoned procurement professional with over 20 years’ experience working in technology sourcing, looking at procurement from the IT perspective, managing tactical suppliers, sourcing software, hardware, and professional resources, as well as extensive experience managing large scale strategic relationships including outsourcing.
Stark shattered some common misconceptions about the profession and trends, bringing to light the true value of technology, due diligence, cybersecurity, and the nature of the procurement professional.
Let’s explore some of these.
#1 Procurement 4.0 Will Allow Procurement Professionals to Focus on the Tasks that Bring True Value to their Company
Procurement 4.0 is a term used a lot these days. It consists of a heightened focus on integrating business processes with partners and improving collaboration, analytics, and engagement.
Digital technologies can assist in planning, sourcing, negotiating contracts, deliveries, payments, and supplier management. Investment in such digitalization will lead to the automation of more processes, and according to Stark, free up time for procurement professionals to be more strategic within the company.
The motivation behind digitalization of the procurement process stems from the need to produce more efficient and cost-effective processes, according to CIPS research out of the University of Melbourne. Businesses crave harmony and standardization for the source-to-contract process; tools that would create a contract, spend and compliance transparency, process efficiency, increase competitiveness and integrate sourcing and contract lifecycles, as well as enable supplier management and collaboration.
“We need to be more efficient in how we negotiate contracts,” says Stark.
According to Stark, if you could use technology to automate the technology negotiation process, it would free up more time to be more strategic. Even the automation of basic administrative tasks would be helpful. Tasks such as marking up contracts, email exchanges with suppliers, or drafting notes if you’re in a meeting, sending purchase orders via e-mail, or using software to place an order, and auto send invoices and payments.
This automation will allow procurement professionals to focus on new areas of business or technology.
Another major benefit to the new tech involved in Procurement 4.0 includes the acquisition and analyses of data, one of the most prized commodities these days. New high-tech data tools can help procurement professionals generate more value by creating better transportation flows, inventories, warehouse requirements, quality inspections, and other parts of the supply chain.
When it comes to those resistant to new tech processes, Stark simply recommends you “learn more about it.”
#2 Procurement Professionals Worry about Cyberattacks
As with any connected technology and innovative processes, the procurement makeover will come with increased cyber risks. Many organizations tend to think procurement and IT are two independent departments, but in reality, if a company is implementing new technology and embracing big data in procurement, they become immediately vulnerable. Big data affords procurement professionals the ability to identify cost-saving opportunities, forecast trends and developments, determine risk factors and minimize potential risks in the supply chain. This crucial supply chain information is vulnerable to cybercrime and places hefty amounts of purchase data such as supplier contracts, financial details and invoices at risk. According to SpendEdge, preparing for procurement cyberattacks include solutions that offer up-to-date security measures, more IT and procurement collaboration, assessment of the security parameters followed by suppliers, and overall, staying up-to-date on the latest tech innovations being implemented.
#3 Procurement Professionals Worry About Modern Slavery
If you were under the impression that slavery was dead, it is with despair that I tell you it is most certainly not. Modern slavery is a topic Stark strives to raise awareness about. According to the Chartered Institute of Procurement & Supply, forced labor in the private economy generates $150 billion in illegal profits per year. Businesses come across the issues of modern slavery when dealing with complex global supply chains. Procurement professionals must do what they can to ensure that their supply chains do not involve any form of worker exploitation.
“Businesses have made fantastic progress,” Stark says, but unfortunately inhumane practices it still exists.
Take, for example, conflict minerals which are extracted via exploitation and whose trade propels human rights violations in the countries where the minerals are taken from. Here in the West, supply chain professionals have been presented with the task of Supply Chain Due Diligence (SCDD) which implements processes around maintaining visibility and tracking where the minerals in their electronics are actually coming from.
Procurement professionals can contribute to the mitigation of these practices by doing their due diligence and asking the right questions on all scales. For example, a procurement professional may engage with a new supplier and raise the questions: “how do you treat your staff?” or “do you comply with local labor laws?”
“I’ve never encountered a supplier doing the wrong thing,” says Stark. “I’ve only read about it.” But in reading about this practice, it causes professionals to wonder about their supplier relationships.
In a recent LinkedIn article, Stark writes: “Most organizations will have robust internal processes to determine the specific criteria required to report compliance with the Modern Slavery Act. While organizations grapple with responding to the legislation, Procurement can take a giant leap forward demonstrating that we CARE…”
As Stark puts it, this heightened awareness is part of the overall goal procurement professionals have: “becoming better buyers.”
#4 Procurement Professionals Do Much, Much More than Negotiate Prices and Contracts
“There’s so much more that we do,” Stark says.
It’s a common misconception that procurement is all about negotiating prices and contracts, but Stark shatters that misconception. The procurement professional plays a strategic role in the company’s present and future success.
“Companies have only X amount of money to spend. We are here to maximize their investment,” he adds.
A typical day includes sitting with stakeholders and suppliers, mapping out the industry outlook and then formulating a strategy around that, managing RFPs, negotiating deals and contracts, and examining supplier relationships by evaluating how they’re performing.
“It’s very broad,” Stark says. “Everyday is different, but it’s about meeting stakeholders, having conversations with stakeholders, having conversations with suppliers and then somehow bringing it all together—your commercial skills, your strategic skills, your planning skills.”
You’re resolving issues but also figuring out the strategy for the organization, dealing with IT, legal, contacting the supplier to ensure they’re abiding by local labor laws.
“It’s not just about negotiating a great deal, it’s about negotiating and delivering a great outcome,” Stark adds.
#5 Procurement Professionals Must Exude Confidence (But this can only be learned through experience)
When it comes to the procurement profession, some argue there’s a talent shortage. According to the 2018 CIPS/Hays Procurement Salary Guide and Insights report, at the time of the survey, 56% of employers said they have struggled to find procurement talent in the last 12 months, with communication being one of the most in-demand skills employers are looking for in their hires. The numerous meetings with stakeholders and suppliers, along with the ability to strategize and bring it all together certainly calls for exemplary communication skills.
Another quality procurement professionals must possess, according to Stark, is confidence.
“Negotiating something with confidence helps deliver confidence in the outcome,” he says.
Maybe you’re up against an aggressive stakeholder or a supplier, but when you exude that confidence it will make a difference. He challenges all procurement professionals to remember that “you have as much to offer as anyone else in the room.”
“Be confident in your capabilities.”