Yesterday, while browsing through the Internet, I happened to read in a Harvard Business Review article that 65% of employees across organizations feel “curiosity” is essential to discovering new ideas. However, virtually the same percentage of employees felt unable to question set processes. This means that, while companies value curiosity (and hence innovation), most prohibit upsetting the apple cart by questioning the way things are done.
This is not startling, and such “important but not urgent” values always take a backseat, especially for procurement talent where numbers like net savings and average cycle time, still rule the roost.
Unfortunately, when you analyze the metrics procurement holds dear, you will realize that most of them are short-lived and may not have a long-term impact. Which raises the question: Are such practices enabling or deterring the right skill-sets in procurement teams? Is the ideal procurement professional supposed to have better relationships with suppliers, or sharp negotiation skills able to extract the utmost from the vendors?
This dilemma is possibly why a recent Hackett Group survey found that 66% of all procurement teams consider talent management the top objective of 2015. The biggest gap, the report adds, is in areas like SRM (supplier management, development, collaboration) expertise, relationship management and interpersonal skills, strategic thinking and analysis, and supply risk management expertise.
Such skills are not inherited but shaped by a person's work environment, and technology has a big role in facilitating a culture of sustainable practices, as demonstrated by a recent The Hackett Group and Zycus hosted webinar on this topic. Let's take a look at how best-in-class software actually helps to sharpen these skills:
Relationship Management: Gauging the mindset of key vendors
The way we see it, understanding the attitude your vendor holds while dealing with you is key to a long-term relation. Some people are gifted in this regard and are able to pick up on body language and subtle clues to understand their vendors better. But what about the many, many vendors who you only work with via email and conference calls? There is no substitute for data of past interactions in such relations. For example, one effective practice is to have a cost-modeling and commodity indices tracking software in place, integrated with your spend analysis. This will provide you insights into, say, how much premium was charged by the suppliers when the cost of their components or labor went up, and had the equivalent amount decreased when the subcomponent prices decreased? Having such past spend information, and matching it with supplier performance / satisfaction scores from other buyers, will provide you with emotional intelligence on your suppliers and keep you better prepared for any supplier meeting.
Win-Win Negotiations: Negating vendor dominance
With most small-scale suppliers, the buyers are able to control the conversation, making sure the conditions imposed are favorable for a long-term partnership. But what do you do when your suppliers are more powerful than you, be it due to the scarcity of competition, or scarcity of the type of commodity? Harvard Business Review recently published an excellent article on this and, of course, the main driving force for creating a win-win strategy was deep visibility into data. The article gives an example of how procurement and finance teams of a chemical manufacturing company were able to collaborate on a multi-year contract with limits on price fluctuation, savings 10% on a long-term basis and also enabling the capacity of the key supplier. Such a strategic change requires visibility into past spend data, estimates of the cyclical nature of key commodity prices, and also a collaboration platform able to connect the dots between procurement and financial data.
Such correlation of an effective technology shaping procurement skill development is quite common and hence, while designing a comprehensive plan for procurement talent development, one should also be mindful of available technology. The nature of business today requires an agile, always-on-the-move workforce which needs to spend more time on strategic pursuits than on tactical ones. This means that the company needs to equip them with detailed information on the go, easy and configurable platforms for managing projects/tasks, and making collaboration easier. Oh, and just in case you forget, it's not easy to manage such a fast-moving workforce; so remember even the guys on the top floor would require a real-time reporting software to keep you with their pace.