It has become our tradition to write an annual letter that accompanies the first podcast of the year. In 2023, that takes us “all the way back” to episode 549. Although that was six months ago, it feels like it could have been six years ago… or 10 minutes ago.
In that letter, I shared three key messages that I thought would be important for procurement this year. Now that we are halfway through, it seems like a good time to check back and reflect on any progress or developments that have come up around those themes.
CEOs don’t think about procurement
This may have been a bit edgy when we shared it at the beginning of the year, but it is still something procurement needs to be aware of. While CEOs don’t think about procurement, they certainly think about the outcomes procurement does and does not deliver. Business outcomes continue to be the best way for procurement to get the attention and opportunities they deserve.
To be fair to CEOs, today’s complex business conditions have created a situation where their priorities are all over the map. We even keep getting conflicting messages about the economy – is the recession still “looming” or has it been called off?
I’ve done a lot of travel this summer, and where you are has a significant impact on the economy you have to work with.
It’s a very different picture in the U.S., for example, than in some countries in Europe. I was in South Africa, and seeing what the economy is like down there reminds me that it is really important for U.S. based procurement professionals to be cognizant that local conditions do not necessarily reflect global conditions. In fact, there may not be such a thing as global conditions right now.
It’s all about thinking local and making sure that when you are talking to your stakeholders you are thinking about local conditions as opposed to just assuming that what you experience on a daily basis mirrors how things are everywhere else.
Procurement will transform beyond recognition in the next 10 years – or cease to exist.
There’s always a risk that procurement might cease to exist. If we don’t acknowledge that, I think we are taking our eye off the ball, so to speak. I think it’s healthy to always have that in the back of your mind because it drives innovation. It leads us to think “What can we do to make sure that doesn’t happen?”
The reality is that most of us will adapt, although some will move faster, some slower. We’ll take advantage of new opportunities – again, some faster, some slower. Saying procurement is not going to exist at all in 10 years is probably hyperbole, but I don’t think we should lose sight of it because it can help focus the mind.
What happens when the pace of change is slow and the C-suite doesn’t understand the procurement value proposition?
We can probably assume change will be a constant, so what will the pace of change be? If procurement is driving change too slowly for the C-suite, they need to be able to explain why. They need to help executives understand what they are doing, and show them the progress that has been made. Procurement can either make a performative show of driving change that doesn’t actually do anything, or they can take a slower path that actually alters the way the company operates.
If the C-suite doesn’t understand the full procurement value proposition, they will make decisions that impact procurement without really understanding the negative effects. To them it’s all positive. That’s where technology can lead procurement to cease to exist if decisions are being made about procurement but without procurement’s involvement. That’s why it continues to be important to build those relationships. We regularly talk about aligning procurement with overall business objectives. We can’t lose sight of that, because if we do, I think that’s where the risk is greatest.
There will always be more to say about high level perspectives like these, but I still believe the messages that we shared at the beginning of the year remain an active part of procurement conversations. If the second half of 2023 is anything like the first half, then I am sure there are still a few surprises in store for all of us!