Procurement at a Crossroads: Career-Impacting Insights Into a Rapidly Changing Industry - Hardcover

Jon Hansen (author)|Kelly Barner (author)|David Clevenger (Foreword By)

Hardcover

ISBN 10: 1604271175 ISBN 13: 9781604271171

Publisher: J. Ross Publishing, 2016

Synopsis

Foreword by David Clevenger, Senior Vice President of Strategy and Organizational Development at Corporate United, and six-time honoree of the Inc. 5000.The procurement profession is at a major crossroads. Practitioners are responding to pressure from executive leadership to become more strategic, in some cases eliminating tactical work through outsourcing or automation. At the same time, performance metrics emphasize the need to continue negotiating savings and managing supplier performance. Procurement at a Crossroads: Career-Impacting Insights into a Rapidly Changing Industry aids practitioners in developing a vision for their medium- and long-term career goals, and shows them how to balance the need to become more strategic while out-performing tactical expectations.

About this title

About the Author

As the Editor and lead writer for the PI Social Media Network's Procurement Insights Blog, Jon Hansen has written close to 2,500 articles and papers, as well as five books on subjects as diverse as supply chain practice, public sector policy, emerging business trends, and social media. Besides being a sought-after speaker internationally, Jon is also the host of the highly acclaimed PI Window on The World Show on Blog Talk Radio, which recently aired its 900th episode. In August 2013, out of a group of 15,000, Blog Talk Radio named Jon Hansen as one of their top 300 hosts.

Kelly Barner is the Editor of Buyers Meeting Point, an online resource for procurement and purchasing professionals, and has over a decade of experience working in procurement and supply chain as a practitioner, consultant, and writer. Ms. Barner is a regular guest contributor to a number of industry blogs and publications. Since 2011 she has delivered a weekly procurement podcast that covers the coming week's events and a guest sound bite with editorial commentary. Ms. Barner has an MBA from Babson College, an MS in Library and Information Science from Simmons College, and a BA in English and History from Clark University. In 2014, she co-authored the book, Supply Market Intelligence for Procurement Professionals: Research, Process, and Resources.

Excerpt. © Reprinted by permission. All rights reserved.

Procurement at a Crossroads

Career-Impacting Insights into a Rapidly Changing Industry

By Jon Hansen, Kelly Barner

J. Ross Publishing, Inc.

Copyright © 2016 Jon Hansen and Kelly Barner
All rights reserved.

ISBN: 978-1-60427-117-1

Contents

Dedication, 
Foreword, 
About the Authors, 
Introduction, 
WAV™ Information, 
Chapter 1: Who Is Procurement?, 
Chapter 2: Has Procurement (Finally) Come of Age?, 
Chapter 3: Is Procurement Strategic?, 
Chapter 4: Is There Truth Behind the Numbers?, 
Chapter 5: Are Win-Win Collaborations Really Possible?, 
Chapter 6: Do We Really Need Another Chapter about Finance?, 
Chapter 7: Can Procurement Technology Benefit from the Uber Effect?, 
Chapter 8: Are the Differences Between the Public and Private Sectors Real or, 
Chapter 9: The Media and Procurement: Are We Really Covered?, 
Chapter 10: Where Does Procurement Go from Here?, 
Epilogue: What If We Are Wrong about the Future of Procurement?, 
Appendices Interview Transcripts, 
Appendix A: Interview with Thomas Derry, CEO of the Institute for Supply Management, 
Appendix B: Interview with Kate Vitasek, Author, Educator, and Architect of the Vested Business Model, and Phil Coughlin, President of Global Geographies and Operations for Expeditors International, 
Appendix C: Interview with Rob Handfield, Author, Bank of America University Distinguished Professor of Supply Chain at North Carolina State University, Executive Director Supply Chain Resource Cooperative, 

CHAPTER 1

Who Is Procurement?

"Some executives used to think of procurement as the place you send staff away in order to never see them again." Leading Procurement Strategy, Carlos Mena, Remko van Hoek, Martin Christopher

In 1913, Elwood "E.B." Hendricks was a representative for the Thomas Publishing Company in New York City. He was a salesperson, busy providing reference materials to purchasing agents at many of the largest companies of the day. The Thomas Register of American Manufacturers was the supplier network or business network of its time, and it allowed purchasing agents to locate products across the United States. Although information on suppliers and their capabilities had been consolidated, most purchasing agents were still focused on their own local community and were skeptical of the need to network in an extended fashion — even with other agents.

In a time long before e-commerce and before use of the telephone was commonplace, business was conducted in person and in writing. As he made his rounds of sales calls, Hendricks recognized how professionally isolated purchasing agents were, even in densely populated New York City. Known by his contemporaries as an idea man, he "saw a need for a professional organization that would bring them [purchasing agents] together to network as well as provide educational opportunities to improve their performance." The organization he envisioned, which would become the New York Chapter of the Institute for Supply Management (ISM) was formally launched in January of 1914. It still exists today, and although it conducts business in a different way and with a vastly different membership profile, it has achieved the national status intended by Hendricks.

Despite the fact that ISM is well-known in the field of procurement, few practitioners know that we owe our oldest professional institution to the vision of a salesperson. This piece of our collective history is indicative of the stereotypical procurement personality and the challenges that it creates for us today. In a field stereotyped as being risk averse, full of professionals who feel most comfortable following or enforcing preapproved guidelines, opportunities to blaze new trails or foresee strategic changes may pass us by.

As was the case in the early 20th century, procurement today is in need of vision and direction. The characteristics of the average practitioner are changing in terms of demographics, qualifications, background, and aspirations. At the same time, companies are looking to accomplish more than managing economies of scale and standardizing specifications to reduce costs. Just over a century after Hendricks helped found ISM-New York, the procurement profession is primed to seize an opportunity for better corporate positioning and unlimited potential. Whether or not the changing profile of modern procurement practitioners and the expanding expectations of the enterprise will come into alignment, and where our next visionaries will come from, remains to be seen.

PATHS INTO, THROUGH, AND OUT OF PROCUREMENT

Now that we have established a historical basis for the collective procurement persona, we must ask:

• What does the history of the profession and its evolution to this point mean to today's purchasing professionals on a practical level?

• Or, to put it another way, just as Hendricks' vision resulted in the establishment of a professional community: what will be the next big shift, when will it happen, who will serve as the visionaries, and what impact will it have on us?

The answers to those questions will, for each individual, have a lot to do with how they found their way into the procurement profession in the first place.

To gain this important perspective, each practitioner must first identify into which one of the following three career categories he or she falls — traditional purchaser (or buyer), Generation Next procurement professional, or second career procurement professional. If, over a period of time, we were to ask a variety of procurement audiences all the same question — How many of you chose purchasing as a career? — the audience response would vary greatly.

It used to be that if one or two hands were raised, it was considered a big number. In the past, it seemed that the majority of traditional purchasing people fell into the job. Back then it was considered a job rather than a profession, and it was more likely to be determined by circumstance than by choice. Starting a career in purchasing was reminiscent of the classic childhood scenario where the captain of the team had to pick the guy with thick eyeglasses and two left feet because he had no other choice. Accepting a career in purchasing was similar to the captain's choice in that no one else seemed to want the job, so you took it and its two left feet rather than forfeit the game.

Equally important is the sentiment captured by the quote that opens this chapter. Sometimes having a career in purchasing had more to do with a manager or executive not wanting to see you any more than it did any choice you might make for yourself. The authors of Leading Procurement Strategy made this statement before going on to discuss the increasing breadth and depth of required procurement capabilities. Not only do our organizations want us to be more strategic with regard to the responsibilities we have had in the past, but also to expand our influence and relevance into areas such as corporate social responsibility, risk management, and supply base innovation.

Whether traditional buyers ended up in purchasing because it was the path of least resistance or because they were banished there from some other function, it did not bode well for their success. It also does little to suggest that the role will survive beyond them. By allowing purchasing teams to be staffed with people who had so little inner direction (or so much ability to offend), corporations inadvertently doomed the role. These professionals had no ability to make the choices necessary to succeed in an increasingly complex and quickly changing landscape. In the process of corporate natural selection, they went extinct after failing to offer enduring value.

Generation Next: Fresh Procurement Faces

Fortunately, and like the tagline from the old Virginia Slims ad proclaimed: "You've come a long way, baby!" — things in purchasing are much different today, largely because people in purchasing (or procurement as it is more commonly known now) are much different. Ambitious professionals choose procurement, either as their first step out of college or as a second career. While even these two deliberate paths bring different strengths and qualities to the profession, they share the recognition that procurement is a promising career choice and hold ambitious ideas about what can be accomplished from a position within it.

This point was driven home when a young woman from what we will call Generation Next (no Pepsi required), approached us with great enthusiasm about pursuing a career in procurement and supply chain management. In stark contrast to the bygone days of dog-eared supplier catalogs and a you don't get what you deserve, you get what you negotiate adversarial mind-set, her interest was based on the opportunity to get a diverse, global business experience. Far from being trapped in a functional role focused on getting the best price, she saw procurement as a compelling way to make a strategic organizational impact.

With a 4.0 grade average from a prestigious university and business experience that included handling sustainable farming and the procurement of pickles from India, she is the poster person for all that the procurement profession can, and will become in the next few years.

Considering these kinds of credentials, it is no wonder that in their book, The Procurement Value Proposition: The Rise of Supply Management, Gerard Chick and Robert Handfield talk about the definite and definitive chasm between the purchasing people of the past, and today's strategic procurement professionals, "As businesses turn their attention from compliance to growth and innovation, businesses must focus, too, on developing their strategy to enhance the commercial acumen and professional capability of their procurement people, beyond the skill sets traditionally required in their roles."

Let's face it, procurement today is a brand-new game, with new rules requiring new skill sets that older generations did not need to possess. The fact of the matter is that the role and value of procurement as defined by those outside of the profession has changed dramatically. It has evolved from being a functional job to a high value career. Or, to put it another way, in the past you would not waste the talents of a person with a 4.0 grade average from a prestigious university on a buying position. Nor did you, early in your career, need to have experience in dealing with a globalized supply base or in working within the framework of socially responsible mandates.

There are, of course, studies that to varying and debatable degrees, attempt to quantify the above evolution of the profession. For example, in her January 15, 2014 article on procurement changes over the last decade, My Purchasing Center's Susan Avery summarized the findings from a 2013 industry survey, excerpted in the text box and illustrated in Figure 1.1.

It is left up to each one of us what we will take away from the My Purchasing Center survey. This is a pivotal point in time for procurement that will redefine both the profession and the professionals' future for many, many years to come. Needless to say, the expectations are great. Procurement 20/20, written by a team of high-level McKinsey executives, offers the following challenge in its last chapter: "By 2020, procurement's role will have become even more important for sustaining constant supply, best cost, reduced volatility, faster and improved innovation, and clean corporate-brand image." If the majority of this promised transformation is to take place between now and the year 2020, we had better get going.

Impact of Second Career Procurement Professionals

Of course we would be remiss if we limited this discussion to purchasing traditionalists and the emerging Generation Next procurement professionals. There is a third, less vocal but increasingly influential group that is starting to make their mark.

Here is the story of Giuliana, who, while participating in a Public Sector Supplier Forum group on LinkedIn, was asked: "Why did you choose purchasing as a second career?" She provided an interesting perspective that until recently may not have received the weight of consideration it was due.

"To answer your question of — Why procurement? — we had just come out of 2007-2008 with the major turmoil in the financial & property markets. I wanted to be more active civically, but certainly didn't want to be in political office. It seemed like every level of government seemed unable to cut their spending. Then a simple position in the Purchasing Department was posted at our local municipality — I had the administrative qualifications and applied.

I feel that if government is to be responsible, then we, as citizens, have to step up and be more active. I had the work experience, and as I am strong in organizational skills, this seemed like an area that I could make a difference — be a part of the solution. It's behind the scenes (which I prefer), but can have a positive impact, if the work is done well. Since I first started, I have had to [sic] opportunity to get certified, which certainly helped broaden my understanding of the industry — both public and private sector.

That choice to work in procurement was the way I participated in local government. And yes, in these last five years, I have seen a slow transition from the mindset of just purchasing/buying materials for the city, to buying/planning within the broader scope of the city's strategic goals. Purchasing is slowly becoming a topic that is considered at the planning stages — questions such as: 'Should we even buy?' and 'Is the purchase necessary for the long-term goals?' Once these questions become routine within the whole organization, along with the choices made, I would say we will have succeeded in reincorporating the procurement department back into the organization as a recognized integral part of the planning process."

Somewhere between the buyers of yesteryear (the majority of whom fell into the job) and the up-and-comers who deliberately look to procurement as their first career choice, the second career generation is almost a hybrid — representing the best of both. They have the depth of experience in the business world and the focused energy associated with choosing to pursue a new and exciting challenge.

It would be reasonable to suggest that since most people from the traditional practitioner group fell into the procurement profession, they are in the same category as those who have chosen procurement as a second career. After all, these individuals were doing something else before assuming the purchasing mantle. Although it is technically a second career for both groups, the fact that traditional buyers were led to it by circumstance rather than free will prevents them from having the same impact as those who consciously chose to make the switch to procurement rather than stepping away from something else. Unlike Giuliana who, for example, had a clear vision as to what entering the profession would mean in terms of organizational impact — purchasing people tend to be functionally driven. A job needed to be done and someone had to do it so — why not them?

In the same LinkedIn discussion stream, a group member named Phillip seemed to echo the second career professional sentiments expressed by Giuliana when he said:

"I myself did not start out in purchasing and I can appreciate proven professionals coming into the profession with new eyes and ideas. That is where best practices come from. I agree, things are changing, and it is not the recent graduates that are doing this. It is people like you and myself and many other talented professionals."

Of course, the impact of generational divides and second career integration relative to the modern workforce applies to all career paths, not just procurement, and it includes changes related to years of experience versus fresh energy and the natural turnover cycle. In addition to these changes, procurement organizations need to be particularly aware of adjustments related to changes in chosen career paths. Professionals that make the conscious choice to transition from another path to procurement are enriched with experience, knowledge, and the enthusiasm to learn so that they can make a difference. They may actually be reshaping the profile of the procurement profession more than Generation Next.

Whether they are a silent majority or influential minority, one thing is clear — second career procurement professionals are positioned to effect the greatest change in the shortest time frame, in a field that is already going through the early stages of a major transformation.

WILL PURCHASING GO THE WAY OF THE DINOSAURS?

We are certain that there is bound to be some spirited debate regarding the aforementioned categories, both as we have defined them and as we have described them. We will also leave it open to discussion whether or not it is fair to assign (or confine, depending on your point of view) someone to a predefined label. One thing is certain, however — procurement needs leaders. From where those leaders emerge will have a significant impact on the future of the profession in the coming years and decades.

If, for example, age is not a factor, as suggested by the My Purchasing Center survey findings, then why can't traditional purchasing professionals make the transition from buyer to strategic industry influencer? And why is so much emphasis being placed on the ability of Generation Next and second career professionals to lead the next evolutionary stage on their own, rather than with or after an official handoff from traditional buyers? Usually, there is a passing of the torch between old and new that recognizes the value represented by an understanding of the history held in the minds of those who have gone before. If it is true that traditional buyers have no role in either the future or the transition to the future, what impact will this break in the generational chain have on the industry? After all, doesn't there have to be some commonality between what was and what is and what will be, to ensure a sound progression?

(Continues...)

Excerpted from Procurement at a Crossroads by Jon Hansen, Kelly Barner. Copyright © 2016 Jon Hansen and Kelly Barner. Excerpted by permission of J. Ross Publishing, Inc..
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Edition details

• Publisher: J. Ross Publishing
• Publication date: 2016
• Language: English
• ISBN 10: 1604271175
• ISBN 13: 9781604271171
• Binding: Hardcover
• Number of pages: 328