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March 27, 2017
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Procurement Priorities

No procurement? Could it be?

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A new book questions whether the procurement function will continue to exist in its current form.
Book cover: Procurement at a Crossroads

A number of current issues in procurement will have an impact every professional in the field, according to a new book, Procurement at a Crossroads: Career-Impacting Insights into a Rapidly Changing Industry. As authors Kelly Barner and Jon Hansen see it, the choices individuals make today will determine the direction of their careers and the future of procurement itself.

While Barner and Hansen are hopeful, they can imagine procurement at some companies, especially those that are focused on price and transactions, "going the way of the dinosaur." As these companies automate purchasing processes, they will have little need for a separate department of buyers. The authors also foresee some leaders in procurement who are well educated and highly skilled leaving the profession for better opportunities. These individuals, they note, could help procurement by spreading its message and information about its value in a company.

But no procurement? It doesn't seem possible. Instead, the book suggests, it is more likely that procurement will evolve into an increasingly strategic function focused on supplier management and serving as a source of strategic ideas.

That transformation may already be evidenced by who is entering the profession. Once, individuals landed in procurement "by accident" or were sent there because they showed little promise, and purchasing was considered a backwater. Unmotivated to change, these practitioners are now realizing it's time to retire or leave the profession. In contrast, the millennials currently entering procurement have university degrees in supply chain management and are eager to begin careers that can be challenging and dynamic.

Consider the example of Kendra Lisak, sourcing manager at Amway. Lisak recently received the 2016 Excellence in Purchasing Indirect Categories (EPIC) Rising Star Award for showing promise in her career as a procurement professional. With a supply chain management degree from Michigan State University, she manages Amway's contingent labor spend, a responsibility that used to belong to a more seasoned colleague. Recently, she identified and resolved a supplier issue that had disrupted production at the company's manufacturing facilities.

Another momentous change facing procurement is how departments are organized and who is leading them. Many companies are reorganizing their procurement department under a chief procurement officer (CPO), who reports to the CEO. Will the title CPO ever become as ubiquitous as that of chief financial officer (CFO) or chief information officer (CIO)? Companies that largely focus on cost tend to have their procurement teams report to the CFO. Others, mainly in manufacturing, may be organized under a chief operating officer (COO). That may not change, but it is clear that neither of those functions does as good a job at managing relationships with suppliers as those that report to a CPO. As competition becomes more global, effective supplier management (and having a senior executive dedicated to it) will become even more important.

Bob Murphy, vice president of supply chain and CPO at IBM, demonstrates how it's done. An engineer by trade, Murphy rose through the ranks to his current post in 2014 and is committed to continuing the transformation of procurement from a tactical effort to a strategic discipline that his predecessors began in the 1990s. Murphy and his team are responsible for US$50 billion in annual spending, including spending that's outsourced by other companies to IBM. To add value to these organizations, they use advanced analytics to learn how suppliers can help with innovation.

Defining what procurement is and identifying its future leadership are just two of the important issues examined in Procurement at a Crossroads, and Murphy and Lisak are just two examples of individuals making career choices that work for both their companies and themselves. They, and others like them, are helping to ensure the future of the profession.

Susan Avery is a business journalist with 30 years of experience covering the procurement profession. Currently, she is editor-in-chief of My Purchasing Center, where she manages the editorial content for the online publication.

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