Roy Anderson has partnered with World Commerce & Contracting to develop a Modern Procurement training program for WorldCC members. What is modern procurement training all about? We recently spoke with Roy to learn about his vision for stepping beyond procurement’s traditional best practices. Where will this take us? How can we answer today’s challenges that constantly demand better results?
Q What is the new procurement program?
A The Modern Procurement program creates a framework surrounding the necessary skills to deliver on institutional expectations of an innovative and optimal supply base. As companies are founded, grow, and develop they must handle dramatic shifts in the competitive marketplace like customer expectations, employee relations, societal requirements, dynamic technological advancement, and the growing impact of a changing risk landscape.
Understanding holistically the objectives of the company includes the need to incorporate the supplier program into the earliest stages of the process and build a contractual lifecycle management (CLM) program to deliver optimal results based on those goals.
So, the purpose of this program is to step beyond the transactional best practices of operational capability and build the skills necessary to deliver innovative supplier solutions that exceed company requirements.
Skills we need are very different from the requirements to deliver cost savings. To be at the decision table, and maximize value, the modern procurement team needs to:
- be able to build relationships up, down and across the organization;
- be recognized in providing business value that supports the line of business;
- deliver supplier-based innovation that will drive revenue growth and profitability;
- enable the full use of supply chain technology that will drive efficiency, transparency as well as improved quality, service and delivery of products and services;
- use technology and expect innovative suppliers to be proactive in the awareness and mitigation of risk throughout the supply chain; and
- evaluate leadership skills required to design, internally persuade and build a modern procurement team.
Q What influenced you to start it?
A In 2010 I worked with a team that interviewed CPOs to project what procurement would look like in 2020. The results were directionally accurate in terms of technology, risk, and penetration of strategic sourcing in new areas. But missing were the changes in the people within the procurement function to deliver on those expectations.
In reviewing job descriptions, I saw the same cost savings, negotiation skill sets that were required to accomplish the base tactical functions, but not the higher-level skills to deliver on optimal supply chain value.
In speaking with chief financial officers (CFOs), chief information officers (CIOs) and sales leaders, I learned the need for improved skills to create a Modern Procurement solution. To follow up, I interviewed 100 leaders across multiple industries and roles to better understand the skills needed for the next generation of supply chain excellence. The results are the basis for creating WorldCC's courses on Modern Procurement.
Q What has been lacking in procurement that is most significant to the solution you offer?
A The McKinsey, AT Kearney, IBM, and Hackett surveys continue to rank Cost Savings as the primary goal for the procurement function.1 This continuous push to find 7% year over year savings has created a supply chain that is extremely fragile2 because of:
- fewer suppliers,
- focus on continuous improvement at the loss of supplier innovation, antifragile methodology, and
- supplier driven revenue and profitability.
So, the goal of this program is also to highlight the value of building innovative leaders in the procurement space that deliver real business value.
Q Why did you partner with WorldCC to create a Modern Procurement program?
A WorldCC is dedicated to members achieving high performing and trusted trading relationships on a global scale. This means contracts are expected to be more than the tactical terms and conditions only. Instead, contracts are considered the framework to help trading partners excel.
The two components of procurement and contract functions were separate entities in the past, but in the Modern Procurement model, the components are a synergistic team with suppliers to deliver integrated contract and commercial capability. The best results are built upon a strong value based contractual partnership. That’s why it made sense to align this program with WorldCC.
Q And finally what do you see as the value for WorldCC and members going forward?
A We all agree that the tactical versus strategic discussion is finished. Transactional procurement must be done, true, but not by the critical assets within the corporate procurement function. That job needs to be automated and outsourced.
The internal procurement function must fulfill a strategic value to deliver supply side solutions to the corporation, but, sadly, many groups are still mired in the transactional activities, with underused technology, poorly developed skill sets, and mere lip service paid to risk.
Modern procurement’s fundamental concept is that creating supply chain value is integral to the success of the corporation. This growing trend is evidenced by a larger percentage of each revenue dollar being directed to suppliers. The trend has resulted from the growing complexity of the products we need as well as the movement of internal work to outsourcing of functions such as, but not limited to:
- data and technology to the Cloud,
- call centers,
- facilities,
- logistics,
- production,
- sub-assembly,
- marketing,
- payroll; and
- workforce -- specifically the growing breadth and depth of the contingent workforce.
This movement toward strategic value requires the transformation of the team from placing of orders to being a value-added partner to your internal customers. The change requires a fundamental shift to being involved earlier in the decision process and being able to work with senior members of the organization. It also requires significantly more time and higher skills than the tactical work being replaced.
Q Where will this take us?
A Supplier spend represents a growing percentage of top line revenue. Therefore, the objective is to deliver supply chain solutions to our Chief Executive Officer’s (CEO) executive decision table with the skills necessary to drive results.
ABOUT THE AUTHOR
Roy Anderson is Senior Procurement Leader known for transforming procurement organizations into centers of innovation, people driven, technology enabled, high value, holistic solutions. Experienced in both high-growth and consolidating companies within military and commercial manufacturing and financial service environments. Roy is a strong partner to business units and finance teams, streamlining processes, driving innovation, and embedding technology and transparency. He has a track record of reskilling teams to meet higher demands and instilling the highest standards for professional integrity and ethics.
For further information on our Modern Procurement Programs, please see click here.
END NOTES
- See also McKinsey Global Surveys
- Article titled The Supply Chain is in Crisis: How Do We Move Forward?