“Today, if we’re recruiting fresh talent, the right resource pool is not available. That talent incubation is not happening, which primarily means we need universities recognizing procurement as a discipline and making sure that individuals acquire a certain level of skills and are ready to be injected into the corporate setup.” – Nishish Saxena, Head of Terminals Procurement, India and Middle East, Maersk
Despite all the mainstream media attention on the global supply chain in recent years, the full scope and potential of procurement’s value is still largely underestimated and misunderstood.
Procurement’s “perception problem” isn’t new, but it is somewhat puzzling that, even in 2023, procurement still struggles to be recognized and valued as a core, standalone discipline and strategic partner critical to an organization’s success.
To explore why this problem is so pervasive, I recently spoke with Nishish Saxena, Head of Terminals Procurement, India and Middle East, at Maersk, about his personal opinions on the evolution of procurement’s value proposition and how procurement can elevate and communicate their full potential to the business.
The Evolution of Procurement’s Value Proposition
In the past, procurement was primarily focused on cost savings. But today’s procurement leaders are tasked with much more. They need to be experts in supply chain management, risk management, negotiation, and relationship building – and have a deep understanding of the markets in which their business operates.
The value they bring has also changed in recent years, based on external conditions.
During the pandemic, for example, when supply chain disruptions threatened business continuity, procurement rose to the challenge. The business imperative was clear – procurement had to identify suppliers with robust contingency plans to ensure the seamless delivery of value to customers and minimize disruption whenever possible.
Fast-forward to the present, and the landscape has shifted, as has procurement’s value proposition. Over-inventory, inflation, and impending recessions loom large, which means cost competitiveness is top priority.
“In both of these scenarios, procurement is the one driving. Whether it is maintaining business continuity by having the right suppliers and maintaining the relationship with them, or now going to the same set of suppliers and trying to bring the cost down. Procurement is very fundamental to any organization’s strategy,” said Nishish.
As conditions change, procurement’s value proposition must align with and adapt to the challenges and goals of the business.
Bringing Value Beyond Supply and Cost Management
When organizational leaders don’t fully understand all the ways procurement can support the business, it is a missed opportunity across the board. Nishish emphasized that companies need to start recognizing the full scope of procurement’s value contribution and not just focus on them as a supply and cost management function.
Many people, he says, still don’t understand that procurement can contribute heavily to:
- Market intelligence, feeding back valuable information to the organization to be used for strategic decision-making
- Support with transformation and change management
- Innovation through strategic supply base management, giving the organization a competitive edge
- Relationship management with suppliers, leveraging their knowledge for the benefit of the whole business
- Sales and other revenue-driving functions of the business
Why is Procurement’s Value Still Not Fully Understood?
Procurement is often seen as a siloed function working independently of other departments, like sales or marketing. This can lead to a general lack of understanding and appreciation for the value that procurement can provide to all areas of the business.
In particular, Nishish said, “procurement is not recognized as a standalone discipline, so there’s no specific skill set attached to it.” This creates the perception that anyone, with no one specific, predetermined set of skills or strengths, can step in as procurement, which eventually devalues and obscures procurement’s value proposition and reputation over time.
How Talent Can Help Solve Procurement’s Perception Problem
One of the most important ways, says Nishish, that procurement can overcome this problem with perception and be recognized as a key strategic driver and core discipline for the business has to do with talent development.
“Today, if we’re recruiting fresh talent, the right resource pool is not available. That talent incubation is not happening, which primarily means we need universities recognizing it as a discipline and making sure that individuals acquire a certain level of skills and are ready to be injected into the corporate setup,” he said.
This starts by canonizing the core procurement skill set, including soft skills like:
- Relationship building
- Conflict management
- The ability to influence and negotiate effectively
- Stakeholder management
- Communication and analytical skills
And a greater share of incoming procurement talent, he says, needs to have – or, specifically, the need to be trained by educational institutions to have – a better understanding of the core functions of the job and the hard skills required to execute starting on day one.
“We need more talent coming to procurement who can hit the ground running from day one,” he said. While procurement values diversity of thought and welcomes talent from different functions, it’s also not good if almost everyone coming in is new to procurement, requiring leadership to invest a lot of time (which is in short supply for most procurement leaders) and resources in educating and developing them.
It’s Time for Higher Ed to Step Up
Rather than the responsibility of skills development and training for new hires falling on procurement managers, Nishish says it’s time for educational institutions and universities to formalize procurement as a stand-alone business discipline by creating courses, training opportunities, and programs that will build interest in the profession, enhance its reputation, and provide the skills and training needed for the procurement labor market.
“If you have universities and the academy supporting procurement, it’ll start to happen in a very natural manner, and all of this has a snowball effect,” he said. “Some companies and institutions are coming together now to create that community, and the conversations are happening, but I think the need of the hour is to take action.”
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