Businesses are emerging from the global financial crisis with a heightened awareness of unnecessary cost and a desire for comprehensive expense management. The specialist skills of procurement professionals are now being called on to help deliver sustainable benefits and cost savings.
As such, procurement is now recognised as an integral strategic function which can transform the performance of organisations in the wake of the crisis. In order to build credibility in this new role, procurement has to become a critical element of the wider business strategy and goals, building credibility through understanding and supporting the delivery of the business agenda.
The best procurement functions have well-defined strategies supported by comprehensive plans that range across category management, people development, key processes and business planning. New strategic procurement operating models are being developed to support the corporate strategy and business agenda. These incorporate executive and board level representation, sustainable cost reduction and benefits realisation, holistic expense management, relevant performance measurement and reporting and effective business partnering and alliance management.
Within Financial Services, procurement specialists are moving beyond procurement of indirect products and services (eg. stationery, printing, IT equipment, telecommunications, furniture & fittings and travel) to deliver more value-added services and realise sustainable business benefits (eg. in marketing, customer support, professional services, corporate real estate, facilities and property management etc) including the selection and strategic contract management of specialised off-shoring and out-sourcing service providers.
Decisions relating to in-sourcing and out-sourcing of supply chain and business functions are becoming increasingly critical to successful service delivery. Sourcing decisions need to focus on accessing world class talent and organisational delivery capability. Critical to the success of right-sourcing is to have a cadre of experienced professionals who can develop and deliver global sourcing strategies. Strategic supplier and relationship management skills are critical. Higher calibre sourcing skills need to be developed to deliver and manage more complex commercial deals.
One of the most exciting developments to date is the use of procurement to analyse, source and negotiate financial intermediary costs such as brokerage, commission, custody, clearing and exchange fees. This moves procurement from the back office to the front office supporting traders, analysts and investment banking and corporate treasury functions.
As the role of procurement evolves in this direction, its strategic value also changes: from merely aiding in cost management and efficiency to improving the core operations of the business, and thereby making a real difference to the customer experience.
Procurement functions have benefited in recent years from significant improvements in technology enablement and effective business processes. However, procurement executives now face bigger challenges with regards to talent and skills shortages. Talent management and people competency are critical areas for businesses to address in procurement. Attracting and retaining top talent that understands buying of specialty services is difficult, as people with these skills are in demand and highly mobile.
Currently there is excess demand over supply for specialist and experienced procurement professionals. Consequently, financial services institutions are competing with consumer goods, industrial and manufacturing companies as well as with professional services firms to recruit and retain the top procurement talent. Successful companies have to be able to attract and retain procurement specialists.
Building an internal ‘cradle to grave’ pipeline of talent, at all levels of expertise, involves using customised learning and development programmes and defined strategies for career development to retain world class talents, including mobility policies to meet the expectations of employees willing to work abroad and in other functions.
Successful organisations have effective talent management programmes focusing on top management and future leaders which are integrated with all HR processes and aligned to company strategy, with an emphasis on taking responsibility for self-management of career development. The best procurement organisations are resourced by highly-trained professional staff, who can differentiate a company from its competitors, and have access to specialists to bring short term subject matter expertise to supplement resident skills.
Academies and Centre of Excellence can help enable this. Identification, development and coaching of top talents is becoming increasingly significant, as businesses seek to improve performance, along with the management of non-performers. Best practice is increasingly for companies to have high quality, modular development programmes for procurement staff that are linked to leading business schools or the Chartered Institute of Purchasing and Supply. These will provide well-trained staff throughout the procurement function, and the opportunity for the best talent to excel.
Specialist support can help financial services firms address the shortage of procurement talent, for example in the development of specialised learning and development programmes to provide staff with the skills and competencies to meet their organisational requirements. Such customised learning and development programmes provide participants with an understanding of the latest procurement developments and insights combined with knowledge of specialist tools and techniques in order to equip them for the challenges and demands associated with specialised procurement and expense management initiatives.
Procurement leaders should consider investing in such specialised learning and development programmes now, and start up-skilling their current teams: getting on the front foot now in securing procurement specialists will prepare the business for any upswing in the economy.
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