Alexei Burns, Group Procurement, Chief of Staff to CPO, Strategy, Planning & Performance, Centrica
This year, we have seen tremendous changes, challenges and also, opportunities. Procurement has played no small part in helping their respective organisations navigate through the murky waters of risk, capital conservation and business continuity all under the volatile backdrop of Covid-19 and the global pandemic which it has brought about.
Prior to the pandemic, procurement was already wrestling its change agenda balancing two distinct changes at the same time:
• A growth in capability, speed and relevance mostly down to the rise, implementation and adoption of new technology applications
• A pull from the respective business to offer more outside of incremental, linear savings delivery and purchasing process enablers
The sequencing is important as the second change is in no small part a by-product of the first change but also, and crucially, technology is allowing procurement to rebrand and reestablish itself focusing on strategic value creation, innovation, sustainability and even wider organisational strategy
Though not yet at saturation point, Procurement leaders are now inundated with tools, technologies and friendly SaaS account teams all promising to propel the team forwards, lift their status and ramp-up value output on an exponential scale. With expert technology now covering every niche of procurement’s wide arm of responsibility, it is understandable and acceptable that many leaders will want to make the most of them! The Spanish Armada was a force to be reckoned with 130 naval ships all under the command and direction of one ship. Imagine those 130 ships with no instruction, sailing off in different directions—a much less effective force I’m sure you would agree. Continuing that analogy, imagine a new breed procurement team as a battle ready armada, lots of smaller teams all pushing in one direction being supported by some state of the art weaponry (the technology).
Technology is allowing procurement to rebrand and re-establish itself focusing on strategic value creation, innovation, sustainability and even wider organisational strategy
The use of technology delivered in the form of disparate microservices creates a big challenge to ensure effectiveness; building the right environment where processes are joined up and digitised and based on a centralised “common” platform that third-party services can bolt onto or connect with. This challenge can no doubt be applied to any area where the use of technology is prevalent. Get this right and it drives progress on change number two. An intelligent, powerful, digital function able to bolster and interface with other business units with speed retaining the ability to scale up and down.
New services utilise technology which we have become familiar with at least by names such as Artificial Intelligence, Machine Learning and Natural Language Processing. These allow for all sorts of activities to become industrialised, applying process and logic e2e across the various Procurement processes. Setting up teams in the right way to optimise these new capabilities means traditional models can be remodelled. EY is leading the way in shaping new “Portfolio” teams over more traditional “Category” teams where portfolios aggregate larger areas of spend and suppliers to increase the scale where new methodologies are to be applied.
Maybe some of you reading will remember using a map to plan a journey somewhere in the car, working out the fastest route, planning your stops and where you may run into problems. This was based on your knowledge, experience and information you had at hand, the best strategy to get from point A to point B. Nowadays, you flick on the satellite navigation which will work out the most optimal route, the service stations and speed limits all in real-time diverting you away from problem areas. This analogy in many ways is like the procurement landscape of the past and future. The satellite navigation is here, so buckle up!
Procurement now has a tremendous opportunity and the future looks to be a very exciting one. Get ahead by putting in place solid foundations on which you can build upon safely in a precise, structured way!