Paths to Procurement Success
George Harris, C.P.M.
George Harris, C.P.M., President, Harris Consulting, Inc., Lexington, MA 02173, 781/674-0041, email@example.com.
83rd Annual International Conference Proceedings - 1998
Abstract. Individuals advance in the procurement field not only due to their technical knowledge of procurement, but due to a set of acquired management skills. This paper describes 10 (ten) aspects of personal development that are usually not addressed in typical training/education forums. Further, it identifies (10) ten dimensions, as portrayed through the personal experiences of senior purchasing managers at Fortune 500 companies, which if pursued, will lead an individual on a personal path of procurement success.
Throughout my professional career, I have witnessed a phenomenon which is present in successful procurement people. These individuals stand out from the crowd. The reason for this separation has been covered in many self-improvement books and the press. Based on experience, I believe people are successful because they have addressed underlying, structural personal development dimensions which lead to personal improvement. The athletic facsimile to these dimensions could include hitting an eight iron exactly from the same spot to the same green 100 times in a row, after receiving a lesson from a local pro who is renowned for that part of his/her game.
Many of the current writings include random lists of activities of noted leaders in the private and public sectors. However, these writings are not based on personal experience or case histories. Nor do the writings offer developmental suggestions to assist in personal improvement (e.g., like improving your golf swing and accuracy as mentioned above).
During the last eleven years, I have trained over 10,000 individuals in the various seminars including leadership, quality awareness, customer service, negotiations, and functional areas such as manufacturing and supply chain management. In these programs, much is said about best practices and steps to develop a core competency in the area of focus. I have heard many stories about the effectiveness of procurement professionals, which have included examples of exemplary individuals. However, for the most part participants discuss the drawbacks of management and the organization. They focus on the negative rather than the positive.
One of the best ways to model competency is to evaluate the reasons for success of procurement leaders, those that have been exceedingly successful and continue to be influential in their respective areas.
Based on my observations, conversations with seminar participants, and work with the operations and human resource people in our client companies, I have found that jobs are rated from a skill required basis; and, training and development plans are structured for broad categories of people. Yet important aspects of personal development are constantly being missed:
- Plans should be either specific to the job or provide the description of the core competencies needed to be successful in any endeavor. I vote for the latter.
- Plans have to be owned by the individual. Too often they are "let off the hook" by their manager for ownership.
- There is a lack of knowledge of overall core competencies for career success.
- Specific training and development plans are put in place, but no one is reviewing the common threads of competency present in all such plans.
- These skills are not provided for in a common body of knowledge.
- These skills are not taught at the secondary or college level.
- Generally, there is a lack of cause and effect in today's writing. Little is available which shows a direct effect from developing a competency and success. This connection must be drawn.
- Successes in development must be chronicled.
- An international standard for success, with specific questions and categories does not exist.
- A commonsense checklist of actionable steps to be taken to develop competency does not exist.
The body of knowledge must include the ten areas listed above if we are to create core competencies and professional success for procurement professionals. These ten areas or "paths to success" are the foundation of this body of knowledge. Each of these dimensions, or areas, are called "paths" because they require ongoing plans to improve capability from one recognizable level to another -- and can be extended in quality. The paths are worn because they are frequently traveled; people can get lost and have to find their way, and paths can become roads and highways, so that people can follow the lead of others. Thus, we speak of paths from the personal experience of leaders in the industry for each of the ten dimensions.
- Customer "Service" Focus: An interview with the Director of Procurement for a large pre-press system manufacturer identified his success with his "customer first" attitude toward daily business. In fact, the Director of Procurement was previously an internal customer of the procurement department. When he was approached to assume the position of Director of Procurement, he was at first puzzled with what he personally brought to the table. However, after considering his technical understanding of the manufacturing business and his long term association with supplier issues, he in fact was an excellent choice due to his intricate knowledge of both the internal/external customers. When faced with purchasing decisions, he utilizes his experiences as the customer to determine "How do I think I would feel in the customers position?" This customer focus has enabled for a good rapport between procurement and the customers. It has enabled purchasing to solicit end user input , develop long term procurement strategies, and simplified problem resolution. The Director of Procurement has demonstrated that appropriate attitude and demeanor is critical to maintaining a positive perception of the procurement department. That perception, serving the best needs of the company, is a difficult balancing act, but crucial in establishing the department's long term procurement strategies. Ultimately, it is these strategies which measure the effectiveness and success of the purchasing organization. Therefore, maintaining the customer "service" focus, has been a crucial skill in the career path of this Director of Procurement.
- Team Participant and/or Leader: A senior procurement manager at a large defense aerospace corporation identified his ability to lead a multi-disciplined group as being an imperative skill to his career progression. His multi-faceted educational background of Business and Law, along with his skills as a facilitator and enabler, gave him the reputation of being someone who could make things happen. This reputation, originally recognized by his co-workers and ultimately by the company, helped him advance quickly in the organization. Throughout his career, he has held various procurement management positions. However, a large portion of his career has been dedicated to developing internal training and development for other procurement personnel. Hence, the values of becoming a team participant and/or leader are stressed as skills that would allow one to be recognized within the procurement department.
- Work with Numbers: The Vice President of Procurement at a Fortune 50 Company which oversees seven different business units stated that he felt immediately comfortable on his first day in his position when he realized what skill he brought to the organization. Looking at his career in retrospect, he recognized that the skill that has allowed him to progress and has brought him to the table in the procurement arena is his ability to work with numbers. His challenge in the procurement world is to coordinate a world-wide purchasing effort in a decentralized environment. How does one perform this task? Through the Vice President of Procurement's eyes, he performs this task by getting accurate data and formatting the data in a meaningful, convincing manner. He commented as follows "Data influences change. People in front of figures are obliged to change. In the absence of good data, people will do whatever they want." Someone who has the ability to collect, interpret, format, and present data in a meaningful, logical manner is someone who has the ability to persuade another party to their point of view. This skill of persuasion through the numbers is crucial in the procurement world. An individual who has mastered this skill is someone who will become a highly sought after procurement specialist. One must understand how a company/organization works in order to be successful in their career. In the eyes of the Vice President of Procurement, "Organizations are influenced by numbers."
- Analytical Skills: Following the career path of the Corporate Director of Purchasing at a large manufacturer of process control systems, it is apparent that analytical skills have been the foundation of his career. The area of procurement was an uncharted turn in his career path. However, regardless of his previously held financial positions, he was always involved in some facet with procurement. Manufacturing companies spend on average 55% of their revenue on purchased goods and services. Therefore, an effective procurement organization is crucial to the financial health of most organizations. It has been recently reported that CEO's are looking at the procurement function as a way to add value to the bottom line. The Corporate Director developed a commodity management concept several years ago at a previous job for a Fortune 100 Company. This model is described as a rigorous process to establish purchasing strategies for the top 80% of goods and services purchased. This formal process forces the buyers/commodity managers to assess the outside market, benchmark, report on quality, delivery, and lead time, and determine how much is spent with who and why. This analysis is formally reviewed by the management team until the right comfort level is agreed and the procurement strategy is formulated. This concept of market assessment and planning is commonly taught in training and development courses. However, in many organizations, it is commonly overlooked. At this company, the job of the Corporate Director of Purchasing is to reduce cost. Every month, costs on all commodities are indexed to measure the effectiveness of the procurement department. This concept of commodity management is how the Corporate Director of Purchasing has provided the required results. Solid analytical skills provide the background for success in this environment.
- Independent Work: The Director of Procurement at a leading consumer products corporation credits his success to his ability to perform independently and stay focused. In three instances in his career, he entered into an organization at a lower level position than that of which he had previously held. However, by beginning at a lower level, the Director of Procurement was able to gain an understanding of the internal workings of the company, understand the technology/service/product line the company was selling, and understand the organization's goals as they related to the procurement department. This strategy allowed the Director of Procurement to rise quickly through the ranks in each of these three organizations. He credits this rise on his ability to remain focused and work independently. First, I stay steady, gain an understanding of the company, and do my job. I do not get sidetracked or pulled off on issues not relevant to my job. I stay focused at all times. Secondly, I understand my job requirements. I do the job that is asked of me. Thirdly, I understand the objectives of the company/division. I always ensure that my work reflects the objectives of the organization. Should I disagree with the objectives, I will always address this disagreement off line, behind closed doors, and not in a public arena. This independent, focused work ethic has proven successful for this Director, not in one organization but in three.
It is the opinion of the writer that procurement staffs must proceed independently without looking to top management to accept their plans. Organizations need people who work "outside their boxes" so that true innovation can be achieved.
- Technical Intelligence: Technical intelligence can be defined in many forms. It could be the ability to maintain the pace and speed of the computer generation, understand the technical complexity and manufacturing process of products purchased, or the interpretation of financial statements. As demonstrated by our participants in this paper, a successful procurement professional must bring some form of technical intelligence to the table. Examples of technical intelligence identified through the surveys include a Vice President of Procurement at a Fortune 50 company who previously was the Chief Financial Officer for the company. This individual brought a wealth of financial knowledge to the procurement field. Also on the financial side, the Corporate Director of Purchasing at the process control system company brought a solid financial analysis background to procurement. This individual utilized his background by requiring the members of the procurement organization to perform analyses for 80% of the components procured. The Director of Procurement for the pre-press system manufacturer brought an engineering background to the profession. His experience demonstrated that he intricately understood the requirements of the products to be procured allowing him to make accurate, technically knowledgeable procurement decisions. The same scenario is true for the senior procurement manager at a large defense aerospace corporation. This individual felt that his educational background in business and law helped him communicate and lead members of the organization to form strategic decisions regarding the purchase of subcontracted commodities. A solid foundation of technical knowledge will always enhance one's position in a procurement environment as it will enable an individual to stand out based on his/her unique capabilities.
- Continuous Improvement Orientation: Continuous Improvement is a concept that has been written and taught at most procurement training and development courses. However, the concept is not the required skill. Rather, it is the implementation of the attitude in one's day-to-day work that will lead to a path of procurement success. An interview with a coffee procurement manager was recently profiled in Purchasing on April 3, 1997. It was expressed that the desire to constantly improve was the rationale behind the success of their market impact. The company has grown beyond their expectations. The purchasing manager originally joined the company to purchase equipment for new stores and packaging materials for production. As the company grew from 100 stores to the current pace of opening a new store per day, the focus became on equipping new stores faster, at less cost, while retaining the highest quality. In order to keep pace with the overall corporate growth and strategy, continuous improvement orientation had to become an attitude for the procurement organization to evolve with the company.
- Presentation Skills: All of the individuals interviewed for this report stated that presentation skills are of utmost importance to become successful in any organization. In the area of procurement, presentation skills are required to status input of materials or services to the company, train individuals both inside and outside the department, provide performance data, action plans, and communicate the needs of the organization to the supplier community. Presentation skills were considered a mandated skill that is needed to be acquired and will be refined at any level and at any time in one's career. Failure to present ideas well will never persuade an individual or organization to accept your viewpoints.
- Excellent Writer: Writing skills were also considered mandatory to the success of any procurement career. Every participant in our survey thought that writing skills were essential. At a minimum, an effective member of a procurement department will need to write plans, letters, purchase orders, contracts, and status reports. An individual who has the ability to write will be an asset to any organization to which they belong. Writing skills will constantly be culled and refined at any level in one's career.
- Personal Development: The need to continue to develop one's self is not always considered a skill. However, faced with a busy schedule and the unending lack of time, that most professionals endure each week, the ability to make time for one's personal development is in fact a skill. Also, the ability to recognize that one could benefit from personal development is also a consideration. Association Management, Feb 1997 asked five CEO's "What have you done for yourself lately?" Circumstances suggest that someone in a CEO position would not have time for self improvement. That answer is wrong. Responses to the question were that "we all have to be ready to learn all the time. You just do it." A procurement executive who takes the time to identify areas of improvement and invests the time in that improvement will be rewarded. Individuals who wait for their organization to train them will also be behind the learning curve. Companies traditionally provide training well after the skills and knowledge included in the training are needed.
Summary. As stated by all the participants in this paper, each of the above paths link together. Acquiring one skill will not ensure procurement success. However, people who exhibit these dimensions will see the linkages and will be able to leverage them. The acquisition of 5-6 of the above skills will allow you to begin your path of success. The degree in which you hone your skills will determine the level of your success. Regardless, the identification and recognition of the ten paths within one's organization will demonstrate to others why these skills are important and perhaps begin a momentum whereby these issues will be incorporated into formal/informal training and development sessions, and lead others to personal success.