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Procurement Capabilities in the Digital Era
When thinking of the ways to move Procurement into the digital direction, I have come up with a six-lane matrix which in my view outlines specific areas of digital transformation. Together, these lanes represent a paradigm shift in the way in which procurement may find itself in the next 5-10 years. Each of the areas in the matrix deserves a detailed review; in this article, I'm only going to focus on skills and capabilities as I believe those might impact every procurement professional very soon.
When thinking about people in Procurement and their Skills and capabilities today vs tomorrow, I did a lot of research. As every function has been looking to automate, downsize, or invest in fixed (robots) rather than variable capital (humans), I have come across diverse opinions of those who research, consult, and practice within the Procurement function.
Opinions overlap in that everyone suggests a need for a changed skill set, but opinions differ on what that skill set will look like. Researchers suggest a very technology biased skill set. Consultants are convinced that most of the current skills can be automated and therefore only top negotiation skills will be needed. Then there are the practitioners who have a totally different view; many believe that nothing will drastically change from how Procurement is performed today. Some think that the next generation workforce will have a combination of IT and Procurement skills.
I don’t necessarily support any of the groups, as I don’t think anybody can accurately predict tomorrow’s business environment; it may stay the same or it may completely change. As I sifted through various sources of information, I prepared my own list of skills which I believe will remain relevant in the ever-changing Procurement environment of today and tomorrow.
(Image Source: stockvault)
My top preferred skill is adaptability. If a person can’t adapt to various business scenarios and fast changes, such person will be worth very little in terms of the value he or she can bring to the function. One must always seek to update their knowledge and refresh their experience.
Agility is very similar to adaptability. To me it means being fast to recognize that the ground is shifting and being able to quickly find a way to address any knowledge and information gaps.
When I hire people, I usually hire those who can find a way out of any situation, be it locating the right person in their network to get things moving, or figuring out how to fix a laptop problem without much noise or complaints. A self-sufficient person will always be in demand, irrespective of the function and the level of technology.
Speed to process and embrace new information
Today’s business environment uses multiple sources of information. We are bombarded by various types and volumes of information. Those who can quickly process, analyze and summarize various bits of information and translate them into a simple language will always know how to add value to Procurement.
Customer centric focus
Perhaps one of the most critical skills in Procurement will be customer focus. Your colleagues, internal stakeholders and suppliers are your customers. Being able to understand what your customers need and why and when they need it will narrow the volume of work and help a person focus on that, dropping non-value add activities and saving time and energy.
Business aptitude and acumen
Relevance to business is what makes Procurement valuable. Our function helps enterprise quickly add savings to the bottom line and assists lines of business in getting goods and services on time and at the best value for the dollar. Those who can understand business drivers well will be an asset for Procurement.
Ability to embrace augmented decisions
This is future of procurement where Procurement professionals will rely more and more on the predictive and prescriptive decisions derived from the ocean of data generated by the enterprise on a daily basis. Having the right sources of data, reliable tools to translate the data into recommended decisions, and being a person who can validate those decisions and combine them with the human decisions is what will separate today’s Procurement professional from the future ones.
(Image Source: stockvault)
Data savvy/design thinking
These two skills are interrelated. As Procurement receives more data from new sources, there will be a need for experts in data, design thinking and related skills. Data isn’t going anywhere, so being able to relate to it, engineer the right data asset or design a sensible outcome/solution is what will propel the Procurement function forward.
Business model awareness
The digital transformation of business will create new business models, not only outside of Procurement but also inside. Learning how various business models impact Procurement or the functions outside of Procurement will be very much in demand. To create a dynamic value Procurement will need to morph and redefine itself continuously, making business model awareness a key attribute for Procurement professionals to have.
Self-awareness is another critical human element that I believe will never go out of fashion. It is something which has been around a long time and will remain for years to come. A self-aware person knows what he/she is capable of and when he /she needs to get expertise from others. I have worked with many people who lacked self-awareness and believed that their way was the right way; this mindset can create conflict and interpersonal difficulties.
I strongly believe that the way Procurement interacts with the market will drastically change. There will be tools and technology that allow Procurement professionals to collect market information and drivers continuously. Also, the market itself will change. We’ll see a shift from dealing with only large suppliers to engaging with a high number of small and medium-sized providers. This means that new engagement models, contractual instruments, and ways of working will need to be designed and managed.
Ability to manage intellectual property
As Procurement becomes more and more agile (fast response time for clients) the need will arise for procurement practitioners to learn to process a high volume of engagements with suppliers who may have little intellectual property at the time of engagement. How do we contract with those? How do we check their credentials and ability to deliver against promise? All of this will require a different Procurement skill set from what we see today.
It is an exciting time for Procurement as it moves forward into the digital era, with new technology constantly being introduced. Think of the skills and capabilities you possess, are you ready?
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