​The changing landscape of procurement

5th April 2011

Francis Marshall examines the changing landscape of procurement in his monthly Training Journal column

 

The changing landscape of procurement“Cotswold District Council Spends £19,000 on Magician to Boost Morale” – The Wilts & Gloucestershire Standard, March 17, 2011.

In this era of public austerity and with the focus on library closures and reduced bin collections, you don’t have to be a particularly savvy political spin doctor to realise that this might be a potentially damaging headline.

I won’t go into the details of this case and its rights and wrongs (in my experience, there’s often much more to stories like this than meets the eye), but essentially a cash-strapped local council, which had just announced £1.4 million in budget cuts, invested £19,000 in staff training where the trainer, a member of the magic circle, used magic tricks to reinforce some of the training points.

The inevitable response in the letters page of the local newspaper was, as you can imagine, outrage with both the council’s procurement department and, rather unfairly L&D, caught in the cross fire!

There are some important points to take away from this, however, in what I believe are growing similarities between the L&D and procurement professions. Let me explain more.

Think of procurement today and it’s fair to say that the heart doesn’t immediately start racing with excitement when one starts thinking about tender documents, purchase orders and the like.

However, we as L&D and HR managers actually have more in common with today’s procurement departments than we might first like to admit, particularly in the need for us both to justify our roles within organisations.

L&D and procurement are both considered cost bases within organisations. As private and public sector companies have looked to squeeze the fat out of their organisations and reduce costs, both L&D and procurement have had to justify their existence like never before.

In the current frenzied environment, where newspapers would like nothing better than to unveil the squandering of public money – we both need to ensure that we are true business partners within an organisation working with line managers and business operations and delivering real value – value that can even be justified to local newspaper editors.

Just as HR and L&D have already undergone a generalist to business partner evolution within organisations, it’s now necessary for procurement departments to do the same.

Procurement departments today need to have a closer understanding of what the core purchasing departments in the organisation need and get closer to the initial stages of the process, not simply by being used as a support service, once a need has been defined, but being embedded throughout and shaping the whole buying process.

This won’t necessarily guarantee that you avoid the negative headlines experienced by Cotswold District Council but it will certainly ensure that you have a strong business case if and when the journalists come knocking.

At Cegos, we have been delivering procurement training for both the public and private sectors for many years, utilising our knowledge with L&D and HR departments, to help bolster skills in what is a rapidly changing profession.

Such changes include the crucial role procurement is playing in delivering savings and efficiencies across the public sector to the growing influence of European procurement law and the pressures for greater transparency.

Out of this training, two key requirements come up regularly – both of which also have resonance in L&D – that of Sustainability and Substitutability.

Sustainability is what I have already described- the need for procurement to be an active and ‘go to’ business partner.

While procurement today is still in the adolescent part of its life within an organisation – no longer protected but not yet delivering against expectations and past promises, it needs to change and change quickly just like L&D has done. Sustainability is all about focusing on how procurement sustains its position within the organisation and provides best value to all the departments it touches.

Substitutability is all about ensuring that you have the flexibility and strength of relationships within the procurement process to ensure that you can firstly protect yourself from suppliers that don’t deliver, are able to procure with the minimum of fuss and complexity, and ensure that relationships are strong enough to adapt to rapidly changing organisational models.

This focus on substitutability is prevalent in L&D today as well. With a host of suppliers on the market and different learning mediums available from classroom learning to virtual learning to the growth of informal learning networks, L&D departments must have the flexibility to react to the changing business environment and learner requirements.

There are specific skills which we are helping procurement executives adopt to meet these twin challenges of sustainability and substitutability. This includes everything from the ability to influence debate within a matrix organisation, where employees are often working under several managers and across different task boundaries, through to the ability to communicate the value of what they do, and learn the skills required to take on the role of organisational and business experts with all the interpersonal and communication capabilities that this infers. Again, the similarities with L&D are clear.

Procurement and L&D are facing many challenges as they seek to define their role in today’s organisation. It’s going to take more than the wave of a magician’s wand to achieve this.

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