By John LaPorta
In the IBM Chief Procurement Officer (CPO) Study, which gathered perspectives from over 300 chief procurement officers (CPOs) and other C-level executives on their current procurement performance and future expectations, three key messages resonated:
- Procurement has become a key competitive weapon – procurement performance has a broad and direct impact on corporate performance.
- The role of procurement is changing fundamentally – procurement professionals need to become business partners, not just buyers, and the CPO needs to transition to the role of "chief performance officer."
- The demands on procurement are forcing an ongoing battle for talent – procurement skills shortages will be the single biggest obstacle to success.
These three messages exemplify the need to focus on having individuals with the right skills available in a timely manner. With the proper talent in place, procurement is in a position to create long-term value for the organization.
To address this need for procurement talent in this day of outsourcing, out-tasking and offshoring, "in-house growing" is a concept that is worth considering. Recent industry and media articles have well documented the U.S.' upcoming labor shortage, resulting from the Baby Boomers entering retirement. One in four of the working population will reach retirement age by 2010 which translates to a potential shortage of nearly 10 million workers. This exodus of talent, coupled with the ongoing globalization of supply chains, is forcing organizations to rediscover the merits of developing their most important asset – their people.
Progressive organizations have been working very diligently to develop their procurement staff to meet the current and future needs of their companies. These companies are looking to accelerate a set of predetermined skills that are crucial for their procurement department. Where normal training and classroom work could take up to two years, these companies need to accelerate their skills development within a four- to six-month window. To address this requirement, organizations should consider implementing a procurement capability accelerator program. There are three main steps in this type of innovative program: 1) Close the gaps in skill sets needed to be a best-in-class organization; 2) take current highly skilled personnel and reposition them within the procurement organization with the correct knowledge and tools; and 3) fill the pipeline in the organization with individuals with the correct skills to plug the vacuum created by retiring staff and talent shortages.
Identify the Expected Outcome
First and foremost, a company needs to view its procurement organization as a tool for achieving competitive advantage and shareholder value. Without this type of top-down view and total management commitment, a procurement capability accelerator program will fail. Also, for a company to proceed with the program, there needs to be a linkage between the dollars invested in its people and a return on investment (ROI). Once there is agreement from management that this is the proper course, you will need to show how this investment correlates into value. We will expand on this further, later in the discussion on how to approach the measurement of this program.
Establish the Skills Baseline
The next critical task after management commitment is to establish the baseline. If the starting point is not understood, how can a destination be determined? Knowing where skill gaps exist is necessary if improvements are to be realized. Once a group of individuals has been identified to participate in the program, a skills assessment should be required of each individual. This assessment will vary depending on how the program is structured (some customization will be required based on the industry and the strength of the procurement department) and which capabilities need to be accelerated. A skills assessment should be conducted by an objective third-party in order to protect the confidentiality of the findings. Examples of skill areas are: