“No matter how strong or how solid your foundations might be, the environment in which we operate is changing at such a pace that if we do not evolve with it, we will become obsolete.” – Sebastien Bals, EVP, Chief Procurement Officer at Merck Group
Thinking about big-picture, existential questions can be uncomfortable. It can also seem somewhat trivial or even frivolous when companies are faced with so many real-world, immediate challenges.
It can be hard to think about the future of procurement in 10 or 20 years when you’re putting out fires today.
That said, stepping back every once and a while to gut check where we are headed and whether or not the actions we are taking today are going to get us there is a necessary strategic exercise. I recently had the opportunity to flex my “existential” muscle in a podcast episode with Sebastien Bals, EVP and Chief Procurement Officer at Merck Group, at DPW in Amsterdam.
As an experienced procurement leader, Sebastien shared his views on the future of procurement and how emerging technologies like AI have placed procurement (and other functions, I might add) at a crossroads where we can either leverage technology as an opportunity to adapt and become stronger or, as Sebastien put it, join the “graveyard of dinosaurs.”
Here, in Sebastien’s own words, are some highlights from our discussion:
Procurement’s Confidence Check
“Ultimately it’s very simple. As long as the company is willing to give me a budget to have a procurement department, it means that they see the value of it. So there’s no need for us to continuously prove that. And I think once we get over that hurdle, once we get over that step, we start flying without a net. I think right now we are flying where we’re moving, but something is holding us back. And that’s holding us back from achieving greatness.”
Keeping Up the Pandemic Momentum
“Over the last couple of years, if you look at the impact and the value we have been creating and how procurement departments across many organizations pulled them through a pandemic, I think nobody will disagree that we have been there for them. So, we’ve all gotten that ‘seat at the table.’ The question is, will we keep that seat at the table? How do we now take the center stage we have been given and shine in our performance?”
Let Go of the Past to Realize the Future
“We still often see ourselves as a support function, and I think we need to elevate ourselves. If you talk to people in operations, for example, they will argue that we are an integral part of the entire value chain of the organization. We create so much value through our suppliers. There’s really nothing small in what we do. The third parties, our suppliers, are the backbone and foundation of most organizations, and that’s not going to go away.”
Future-Proofing with Relationships
“Being the customer of choice starts with having strong relationships. When you’re in trouble, you want somebody to support you in that relationship. You need that foundation. So, I think if anything, procurement is far more evolving towards relationship managers than anything else.”
Adaptability is the Antidote to Extinction
“I do think procurement is set up for extinction. On the one hand, you can see technology as a threat or, on the other, as an opportunity. If we choose to build on our foundations from the past and believe that they will make us successful in the future, I believe that the path to extinction is set. Because, again, if we do not buy the solutions from these companies, they will stop coming to us, trying to sell it, but go directly to our management or to our stakeholders.”
It’s OK to Say “I don’t know”
“Nobody has the answer about the future. People sometimes look at you as the head of the function to say, ‘so what’s the answer? Where do we need to go?’
I don’t know. I’m discovering it together with you. And I think that’s something also that we need to create as an atmosphere – being honest towards our team saying, ‘we might go left now, but two months from now, maybe a year from now we might go back to the right.’
And so we need to be humble about the fact that we don’t have all the answers but that we are discovering and we are courageous to at least lead the way for change.”
How Should Procurement Evolve?
“Traditionally, procurement had a category setup. And so we would organize ourselves around markets and around spend categories, which would make sense from whatever point of view.
Now, I still believe that that’s important. You need to have a depth of knowledge or a deep expertise in specific areas. But I also do believe that we need to start evolving much more towards a business-centric approach.”
