The procurement function is changing. Speak to almost any CPO in ‘big industry’ and they will gladly extoll the virtues of taking the role beyond simple price negotiation to making it a critical and integral part of their whole business.
But how does this approach work when you are not producing physical products? When what your company does is not made from what you are procuring, can you really still have that wider business impact?
Dr. Heinz Schaeffer, Chief Procurement Officer NORCEE (Northern, Central and Eastern Europe) for AXA believes it can and explains how in this Q&A for Indirect Procurement Leaders News.
What are your top 4 spend categories this year, and do you expect this to change in the near future?
In terms of volume: Professional Services, Consulting, Real Estate, Marketing
The change in importance depends on the achieved coverage/influence, risk assessment/reduction, supplier/market development, and overall business strategy; so far the major focus of the future will be on Professional Services and Consulting.
How have you seen the procurement function change over the last few years, and where do you think it is going?
Over the years the Procurement function has developed from "pure purchasing function" to a function with its own policy, processes and a strategic importance for a company and it has started to deliver added value for a company. The added value is created e.g. through delivering better conditions, improved quality, more innovation, budgeting support etc. and by meeting better internal customer needs. Finally Procurement has become more aligned with the business and started to integrate suppliers as partners in the solution finding process and delivery.
Due to the increased importance of procurement, the need for a reliable and consistent talent recruitment and management has become more present, next to the fact that Procurement should be seen as a regular Business function such as IT, HR or Marketing.
Do you feel the economic downturn has been one of the reasons for the rise in strategic importance of the CPO?
The rise of strategic importance of procurement is in primarily due to the increased striving for economics and efficiency. Regardless of downturn or not the companies aim to become more efficient. Here procurement has an important role to play both in economic up or downturns and consequently I think that the role of CPO is something that should go without saying now and in the future.
My personal perception/conclusion is that after having started approximately 15-20 years ago to put more importance on Professional Buying activities being performed by colleagues of Procurement the Procurement colleagues in the meantime have the chance to receive a good education (there are several institutes ( high schools, universities), the set-up of the Procurement organisation is similar as for any other Business function and no longer something happening "by accident", the structuring and staffing has reached a maturity level which is professional and competitive, and the salary benchmarks reveal that it is worthwhile to become a member of the Procurement community. Last but not least the content of the job profile is no longer "just" to write a PO - it is a very comprehensive and quite often complex set of various requirements to be fulfilled as well towards the internal side of the company (understand, transfer, advice, educate, ensure) and external side of the company (research, request, develop, find an exit, solve, etc.) and this in a quickly (re)acting, mobile, and international environment.
Do you think this is permanent, or could things ever revert back when (if) the economic climate improves?
I do not see that it will revert back. I realise an increase in complexity (uncertainty, shorter periods, volatility, etc.) and in speed: there is a real need for a reliable and fast reactiveness. The pace is set and will not slow down.
What are you top 3 tips for getting buy-in those ‘more challenging’ stakeholders?
1. LRD: listen - reflect - deliver!
2. Be patient even though the pace is set.
3. Still act as a person and not as a function: Do what you do with respect, with empathy, and with passion.
The changing role of the procurement function in the financial services will be under the spotlight at brand new conference ProcureCon Financial Services – Europe's only dedicated financial procurement conference for senior finance procurement professionals.
Discover more at www.procurecon-finance.com