Preparing Procurement Talent And Driving Diversity For The Digital Enterprise

Marcell Vollmer

Procurement has experienced a steep learning curve in recent years. Digitization of nearly every aspect of the business area it serves and the suppliers it engages has made the function more complicated and visible. In five short years, the chief procurement officer (CPO) has been foisted from a behind-the-scenes, cost-savings warrior to a front-line player in the boardroom. And as competitive pressures and a broad range of risks quickly emerge on a daily basis, CPOs are innovating and transforming the procurement organization to support growth and fend off competition – positioning themselves as the chief value officer in the future.

This new digital era has given procurement a new set of challenges, which calls for a new level of leadership-driven initiatives. In the past, CPOs would answer these demands with a larger budget, more involvement in other areas of the business, and greater influence in strategic, executive-level decisions. Today, we all know that this is not possible in an environment of flat budgets and low staffing counts.

The future of procurement lies in its ability to streamline the organization, automate operative and transactional processes, and implement a seamless source-to-settle process – freeing up resources that can be refocused and reinvested in value-add activities. Attracting and retaining the right talent for procurement is – and will be – a key strategic goal for every CPO. In the same vein, it is important to invest in existing people and embrace new skills to lead more strategic – as well as compliant and sensible – buying decisions enterprise-wide.

It’s time to upskill, reskill, and diversify the procurement function

To make procurement more valuable to the company, CPOs should develop a team that can draw from a wide range of creative skills, technical abilities, and innovative experiences to take advantage of emerging opportunities and deflect incoming risks.

Take the demand for supplier diversity, for example. While this element may be one part of the entire supply chain planning process, it’s becoming increasingly important to the bottom line. According to a Hackett Group study, “ROI-Related Supplier Diversity,” procurement organizations that maintain diverse supplier relationships generate 133% greater ROI and reduce buying operational costs by 20%.

Realizing such advantages takes more than adding vendors owned by minorities, women, and veterans to the supply base. As a service arm of the entire business, the procurement function must be just as diverse. Such an initiative includes hiring and mentoring top talent across racial and ethnic lines, nurturing millennials who bring in new perspectives, and reassessing how women are hired and engaged in leadership roles. By modeling inclusion internally, the CPO creates a foundation of mutual respect, teamwork, and accountability across all relationships while ensuring that suppliers complement the enterprise’s values and vision.

To fully realize the potential of every one of these supplier relationships, CPOs also should consider injecting the organization with three core competencies:

  • Drive greater value through cross-functional collaboration. Collaborate with other areas in cross-functional teams. Not only does this outreach effort bring in much-needed skills, but it also allows existing staff to gain exposure to different parts of the company, understand business needs better, and improve hiring decisions based on corporate fundamentals and direction.
  • Strengthen analytics skills. Take advantage of Big Data and the data available on your suppliers’ performance and buyers’ history to drive more strategic purchase decisions and develop more effective partnerships. Procurement staff should be trained to synthesize and analyze this information into business-relevant insights, recommendations, and outlooks. This functional model may range from a single dedicated data analyst or a center of excellence staffed by a team with sophisticated knowledge in data science.
  • Look for nontraditional skills when acquiring new talent. Embrace competencies – such as social communication, digital media, and cross-functional experience – that are fundamental skills when engaging in a service-oriented model. All staff members should be able to report and advise all areas in a manner that is easy to understand, relatable, and compelling.

Retraining may be required to meet these new demands. More important, some staffers and potential job candidates will likely view this internal transformation as an opportunity to break out of comfort zones, take on new challenges, and gain strategic influence. For example, if a vendor relationship manager excels at procuring commodity-related relationships, advancement may occur in the form of a lateral move into different categories or a leadership role in special projects.

CPOs should also be mindful that millennials will work differently and expect different career paths than generations before. It is critical to attract great talent to drive success and value for procurement. From my perspective, there is no better function than procurement to get an overview of an organization across all lines of businesses, gain insights, and learn the business model. The agility of the generation entering the labor market right now will allow procurement to attract talent and transition itself into a career development center.

Nevertheless, it is the CPO who stands to gain the most from reskilling, upskilling, and diversifying procurement. By going beyond cost control and building partnerships with every area of the enterprise, the CPO can innovate a supply chain that addresses business needs of today as well as five years from now. And when a supply chain is low-cost, strategic, efficient, and competitive, something miraculous happens: The CPO’s seat at the executive table is secured.

Will such reskilling, upskilling, and diversification efforts allow CPOs to become the driving force that will empower and position the company for long-term success? The stories I hear from our clients have turned me into a believer that this is indeed possible.

Watch the replay of my Ariba Live keynote to learn how procurement organizations are achieving a level of nimbleness that allows them to respond to evolving business needs and shifts in supply markets.

Marcell Vollmer

About Marcell Vollmer

Marcell Vollmer is the Chief Digital Officer for SAP Ariba (SAP). He is responsible for helping customers digitalize their supply chain. Prior to this role, Marcell was the Chief Operating Officer for SAP Ariba, enabling the company to setup a startup within the larger SAP business. He was also the Chief Procurement Officer at SAP SE, where he transformed the global procurement organization towards a strategic, end-to-end driven organization, which runs SAP Ariba and SAP Fieldglass solutions, as well as Concur technologies in the cloud. Marcell has more than 20 years of experience in working in international companies, starting with DHL where he delivered multiple supply chain optimization projects.