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The BIG question for Procurement

Posted by Tim Cummins, President of IACCM, Professor, Leeds University School of Law; Chair, International Commercial & Contract Management | Jun 13, 2018 11:27:00 AM

More and more is written about the future of Procurement and the shift that is required in its approach. Collaborative, value-focused,  approachable – there is extensive commentary on the changes in behavior and attitude that are needed to engender trust and thereby raise functional status.

These observations are not new (I can recall similar discussions regarding value and status going back more than 20 years). Emerging technologies certainly make them more urgent, since a high proportion of procurement jobs are under threat. So the big question: why isn’t Procurement changing?

It’s easy – and tempting – to use excuses. Among the most common are the impact of the internal measurements (negotiated savings and compliance) imposed from above, or the untrustworthy behavior of suppliers which prevents collaboration. But the truth is that these issues won’t go away unless procurement personnel make them go away. They have power over their own destiny.

We will squeeze them until the pips squeak

Behaviors are embedded. It takes leadership and determination to make them change. I’m told that much Procurement training still perpetuates the adversarial, them-and-us attitudes that undermine a shift in status. Often, those who should be setting an example fail to do so. For example, at a recent meeting, a leading advocate of collaborative working felt the need to explain that ‘Collaboration doesn’t mean weakness – we’ll squeeze suppliers until the pips squeak’.

And suppliers confirm that, in general, Procurement attitudes aren’t changing. There’s lots of talk about value, about delivering outcomes and working together, but for many the reality is a process-driven approach with little evidence of shared responsibility for performance.

Beacons of hope

There are beacons of hope. Tesco, a large UK retailer, has recently been cited for its progress in shifting from a highly adversarial approach to one of increased fairness and respect for its suppliers. General Motors is another example where supplier ratings have improved dramatically in recent times, reflecting a move away from its power-based approach towards the supply base. In Australia, CASG (the procurement arm of the Department of Defence) is a true leader in developing its contracting and relationship management expertise and Jemena, a power utility, is also at the forefront of change.

We see an increasing number of individuals and groups that are opening their minds to different training and certification providers, recognizing the need to break from ‘old school’ thinking. At IACCM, we continue to experience growth in the number who realise not only that suppliers are not the enemy (there is actually interdependence), but also that shared learning, shared methods, shared terminology offer the best route to mutual understanding and respect. These groups also appreciate the critical importance of gaining broader commercial skills, rather than an exclusive focus on procurement and logistics.

It is perhaps the issue of respect that is key to change. By working together, customers and suppliers can achieve great things. To flourish, Procurement personnel must become the instigators of change. It’s a choice –  and truly does represent the BIG question.

IACCM will be running a series of programs on the BIG question, Procurement and change. Watch out for webinars where we will feature those who are successfully transforming and this will culminate in  workshops and discussions at the IACCM Americas conference, ‘Collaborating Across Boundaries’, in October. (visit http://www.iaccm.com/Americas)

Topics: contract /commercial management, procurement

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