Will the 4 C’s of Procurement be replaced by the 4 R’s of business?
Is Contract Management the new black for the procurement profession?
Tim Cummins, CEO of IACCM, has been broadcasting the value of contract management to his growing readership for some time now, demonstrating the virtues of good contract management, but also the growing necessity of it. In this eSeries we share 10 of Tim Cummins blogs which help define and demonstrate this statement. Part 2, Will the 4 C’s of procurement be replaced by the 4 R’s of business? is below. Subscribe to our blog to receive the next installment directly to your inbox.
Every parent must at some time look at their child and wonder “What will you do when you grow up?” Today, it is perhaps harder than ever to predict or offer guidance. Jobs that once seemed safe and secure are increasingly under pressure or disappearing; at the same time, new roles are emerging – a recent report suggested that 15% of the jobs in London today did not exist 15 years ago.
Yesterday I presented at the PASA conference in Melbourne, Australia. My topic was ‘Is the world of Procurement disappearing?’ And my answer was in many respects yes – because the role and its potential value are changing fast. I suggested that all the ‘C’ words that have been associated with the function (control, compliance, categories, commoditisation, cost) are becoming supplanted by higher value issues that have much greater appeal to top management – for example, ‘the 4 R’s’ of reputation, relationships, risk and return.
Underlying the challenge for all workers today is the relentless rise of networked and digital technology. ‘On-demand knowledge’ means that simply knowing things or performing process steps has limited value. I made clear that this challenge is universal – one has only to follow the debate in other professions to appreciate that they are all insecure and that roles which perform tasks or offer general advice are disappearing – no one will be willing to fund them. Doctors, lawyers, accountants – many of the services they provide can be performed faster and more accurately on-line.
So the important question is ‘what’s left?’ And it seems to me there are two fields on which we can focus. Both are related to the management of the changes going on around us – one being to deal with the complex and innovative possibilities created by our changing world and the other to establish and maintain the framework that enables the performance of others.
Organisations survive if they establish competitive advantage. While product differentiation is important, it is relatively hard to sustain. Therefore it must be accompanied by commercial differentiation – the ability to deliver things that others cannot do, or to deliver them more reliably and at lower total cost. At one end of the scale, this may mean highly complex and innovative projects which demand exceptional judgment, teamwork, ingenuity. At the other end, it would be represented by agile and efficient standardisation to support mass production of goods or services – demanding replicable yet adaptive processes where human operatives are empowered to be highly self-sufficient.
So where does Procurement play in all of this? My suggestion is that businesses will soon stop thinking about ‘buying’ and ‘selling’ as opposites and will instead start to see them as integrated activities that depend on an ability to coordinate a portfolio of trading relationships that deliver organisational goals. In other words, there will be a specialist group that oversees the capabilities associated with implementing commercial strategies. They will focus on the portfolio of required relationships and the mechanisms through which these are transacted and performance is overseen.
For today’s Procurement practitioners, as with other professionals, their underlying knowledge will be assumed. Value will come from their skills in leadership, influencing, creativity, judgment and coordination. They will engage either in supporting high risk projects developing innovative and demanding solutions (for example, major capital projects or transformational service delivery); or they will be developing and maintaining the tools and systems that perform the roles of today’s procurement practitioners.
Their measures will no longer be based on the divisive formula of today (compliance and cost), but instead on their contribution to revenue and reputation.
Forming and managing trading relationships lies at the very heart of human development and economic wealth – so a role in this field will continue to offer tremendous opportunities. But it must be as an enabler of performance, not as a constraint. So what advice should you offer your children? I think quite simply, they must always focus on roles that deliver value and benefit to others and which draw on their ability to make good judgments, to be creative and to be energised by innovation and change. Hopefully, we can ourselves exhibit those characteristics and prepare them to take advantage of the volatile, uncertain environment they will inevitably face.
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