Live From Procurement Leaders World Congress 2016.
May 17, 2016
Alex Short
3 minutes

How much value have you created in the last year?

Its that time of year again where we brush off our dusty black ties and ready our-self for the upcoming World Procurement Awards. The champagne is on ice and the judges are deliberating over any final decisions, will it be you, us or someone you have done business with that takes home a golden prize?

Last year John Patterson former CPO of IBM spoke and it’s his words I am keen to reflect on. In this post I will pull out some extracts from his speech and wonder how far have we taken his words in the last year?

John started with this;

There is much more procurement can do and indeed need to do. Procurement value is founded upon cost savings……and this is the best understood contribution that we make……BUT it can be so much more.

Some way to open a speech! I couldn’t agree more. Taking a look back at the last year it is clear from where we stand that the procurement function is beginning to develop and change.

The train really has begun to change direction, granted in small pockets but as they say ‘you’ve got to start somewhere’. Old Street Labs is lucky enough to be working with one of the biggest Pharma companies in the world. These guys really have taken the bull by the horns and set about making their procurement function one that focuses on value creation.

I can safely (and gladly) say that the early adopters of the procurement value movement really do exist and my word what a fantastic taste of success it is to see some of the biggest businesses in the world re-engineering themselves. So hats off to those of you that are driving towards value creation and true business to business collaboration.

Procurement organisations need to understand and accept that their role is not limited to cost savings….WE need to embrace and sell the view that our ability to create value goes way beyond that basic goal of saving money…

Value Value Value it’s the word on the tip of everybody’s tongues but what have you done in the last year to move in this direction? Have your KPI’s moved from a pure cost focus, is innovation something that your team is actively engaged in?

What is the health of your strategic supplier relationships, have you shared your roadmaps and begun on the journey of building up trust within those key partnerships? As john goes on to say:

We need to take advantage of the unique position we have which provides visibility to……and relationships with….. thousands of companies in the marketplace with tremendous capabilities and willingness to help us deliver value……help us innovate using their intellectual capital……….. if we allowed them to.

We’re currently working with one of the biggest tech lighthouses in the world (we can’t tell you who they are yet, but you know them) and this quote couldn’t summarise their relationships better. They work with their supply base to help deliver value back to both businesses. Embracing technology and new ways of working they are able to be agile, collaborative and of course innovative.

One of my biggest reflections of the year has been whether it will be modern organisations, tech driven organisation that will set the future tone for our function. There are organisations out there that didn’t exist a decade ago that have surpassed some of most established industry titans in terms of procurement maturity. I believe that in 5-10 years time procurement functions across the board will work like these businesses. There key to success appears to be the fact that they have removed the inter-company boundaries for communicating and working together on shared goals. There is no sight of Excel and Sharepoint, just beautifully crafted technology that is easy to use as Facebook and Apple – driving the right behaviours and successes.

The key point is that if we want to increase the value we deliver and excite our employees to want to make a career out of Procurement……..many more of us need to broaden our horizons and embrace a perspective of Procurement that goes way beyond the basics.

Let’s make this profession one that is sort after. Have a think about how you can, over the next 12 months, broaden those horizons and develop the position you hold. There is no doubt that those who do will be the CPO’s of the future.

Procurement organisations can deliver…….Innovative and creative solutions to the business challenges our companies face…utilising not just our own, but our suppliers’ full range of capabilities….

This has been a year where businesses are announcing collaborations and partnerships at every corner. The getting to We mentality is in its infancy but my word the businesses doing it well are reaping the rewards.

It’s clear that leading Procurement organisations are aggressively pursuing value creation and that is what is likely to make them winners in the battle to increase their role and relevance within their companies but importantly also in the battle to attract and retain the brightest Procurement talent.

I look forward to seeing you at the upcoming awards, if any of this resonates then give me a shout and let’s catch up at the awards or over the phone. I will leave you will with a recent white-paper that gives a  three dimensional view on Performance Management!

Download 3D Performance Management Whitepaper

Alex Short is Founder of Old St Labs he is passionate about building the next generation of business software. He is recognised as one of procurements thought leaders.
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