At an event the other day I overheard one of the delegates describe their Procurement department as the place where employees who have failed in every other department are sent. A 'departure lounge' for poor performing staff or those with no other specific talent.
Those who work in the profession know that this is far from the truth but what I do know is that there are too few graduates who enter college with aspirations to embark upon a career in Procurement once they've completed their studies.
This could be attributed to the modern outlook and 'millennial' culture in which industries and their requirements change rapidly and therefore making firm plans as to which career or 'trade' you will eventually embark upon is of a lesser priority than inthe past. After all, recent studies claim that by 2030 65% of graduates will enter into careers that don't currently exist.
But part of the lack of aspiration for a career in procurement is the perception that 'anyone' can do it. From an outside perspective, the role of procurement is to 'squeeze' suppliers for the lowest price, and maybe also approve purchase orders from a compliance perspective. This of course is a basic assumption and is no more true than assuming that a finance manager simply adds up numbers on an excel sheet and all a marketing manager does is dream up ideas for advertising campaigns.
The role of a procurement professional; when carried out properly, has a level of complexity which is over and above this perception but the problem arises when procurement is not 'done' properly due to a lack of knowledge, ability, qualifications or ethics. In a profession which does not currently have mandatory standards of attainment, it is difficult to effectively regulate behaviour and quality.
The level of corruption in global procurement is a case in point. It is estimated that corruption adds 10% to the cost of doing business globally and 25% in developing and third world countries. This is a metric that needs to be addressed and licensing the profession would go a long way to reducing these figures.
Corruption is not the only by-product of poor procurement practice. I heard the case recently of a well known cinema brand which was sold to a competitor. In concluding the transaction the competitor had not checked whether what they were buying was the cinemas assets, the brand, or both. Having not carried out this due diligence they realised that what they had paid for was only the physical locations in which the brand previously operated, but had no right to use the name; which defeated the object of acquiring the brand in the first place. Would a well versed procurement professional being part of the negotiation process have averted this? Well, they would certainly know where the accountability lay such an individual had been engaged.
On the other end of the scale, Apple is an example of an organisation which operates an efficient and innovative supply chain function and consequently invests only 3.5% of its revenues on R&D. This compares to its competitors whose research and development spend is in double digits. This is a simple indicator of effective Supplier Relationship Management (SRM), a core function and remit of any high performing procurement and supply team.
Anyone who watched the recent movie War Dogs will have seen the unexpected irony that it projects in how procurement should and shouldn't be done. The movie covers the US governments' online portal in which anyone could bidto supply weapons under contract to the government. Ironically, the system was set up to ensure that large contracts for the provision of arms were not simply awarded to companies with government interest or influence without a proper selection process. The result seems to have been a lack of due diligence in the supplier selection process which led to some unscrupulous suppliers being awarded contracts and subsequently jailed for supplyingitems which didn't meet the required standards. I'm uncertain how close the film is to a depiction of actual events, but it does appear to display an unprecedented lack of due process.
Procurement is not rocket science andwe all utilise end- to -end supply chain solutions such as Amazon to procure goods for our personal use on a daily basis. Soyes, anyone CAN do procurement, and anyone can purchase goods and services.
But only those qualified specifically to do so should be allowed to "spend other peoples' money".
