A guest blog by David Wylie, CPO Thames Water
Around 65 million years ago, an asteroid struck the earth. It did so with the power of 21 billion times the strength of the atom bomb which destroyed Hiroshima. In doing so it would have created a mega tsunami of over 100m high and sent the earth into darkness for over a decade. Ultimately the impact wiped out over 75% of all animals living on earth and brought to an end the 170m year reign of the dinosaurs. The impact crater can still be seen in the earth’s crust near Central America.
Interestingly, if you had been a dinosaur eating away at the shrubs and trees at that time, you would have been oblivious to your impending doom save for a small light in the sky growing ever brighter. The end was swift and violent.
And so to us in Procurement. Whilst it is fair to say that the industry has changed very significantly over the last 30 years, it is also the case that a number of the practices which existed in the 1990’s still exist today and that in many organisations, it has been difficult to cast off the shackles of “the process” and “savings”. Part of this is our own doing and it is critical to the future for the function, for us all to change the narrative of our what our core purpose is. Getting the right cost base for a business (I personally wouldn’t call it “savings”) is BAU, but there is so much more value than that that can be delivered on top.
Of course, some procurement organisations have already been successful in moving to be a real value driver in their company looking at bringing speed, agility, margin improvement, access to new markets through the careful curation of their supply chains. They have embraced new technology to automate what they can, focussing their effort of those things that can make a significant difference. They are measured on a balanced scorecard of delivery, but importantly it is against the same measures which their key business stakeholders are measured on. These teams are still in the minority. To date both types of teams have been allowed to co-exist as businesses mature from a technology perspective but I suspect a seismic shift is coming. Savvy, commercially minded businesses will quickly work out which types of teams can deliver a more rounded value proposition. For others, the machines are coming…
Hanging in my house is a photo of my wife’s great grandmother. She is pictured stood smiling behind a counter at Woolworths. At the time, she was an integral part of the service proposition. The gatekeeper between the shopper and the goods. Over time, stores have recognised that it is cheaper and easier to let you pick your goods yourself (and later to scan your own produce). Shortly, scanning won’t be needed at all and various trials are underway to bring this solution to market. The point is that in a short period of time her role moved from being essential to entirely redundant. For her and many like her, from a working perspective, it was her “asteroid” moment.
Think of this in Procurement terms. How often do we cling on to that role as the gatekeeper, the barrier between our stakeholders and the marketplace when the interaction between stakeholders and the market could happen directly with technology assuring quality, compliance and payment. All of this can become automated and as with actual stores, frictionless trade will remove the need for those gatekeepers.
So, is the end of Procurement, well not quite. As I said at the beginning, the ateroid wiped out a large proportion of life on earth but some things thrived as a result. Adaptation to the new conditions was key to success and the same is true for us. We are at our point of adaptation – to look at those new innovations that exist in the world, to use supplier relationships to drive new possibilities and to become fully aligned “business people” using our deep knowledge and insights of products, services and supply chains to drive business solutions and make our businesses a true customer of choice. It may even need us to adapt the title of our function (but more of that in the future)
I think we are all at our decision point, our potential “asteroid moment” – our time to radically change, to adapt our purpose and re-align our approach. The alternative is to keep grazing on the shrubs, watching that light grow ever brighter.
