Yesterday, Geraint John, editor of CPO Agenda, examined supply management trends and approaches in Europe. In today’s final installment of this Supply Excellence exclusive interview, Geraint shares his views on how the supply management talent crunch has reached Europe’s shores and how leading organizations are combating it. He also delves into supply management technology use in Europe and gives his predictions on the future of supply management in the region.

SE: The talent crunch is one supply management issue that seems to transcend geographies. What are some of the best approaches you’ve seen European companies take to recruit, nurture, and retain supply management talent?
 
You’re absolutely right, it’s a huge issue for both US and European firms. The most innovative approaches I’ve seen over here tend to be from companies that maybe aren’t household names and therefore don’t have the level of employer brand recognition that talented, ambitious business graduates associate with.
One consumer goods company I know based in Holland has put a lot of effort into this, despite not having, on the face of it, the “sexiest” products. I think it starts with the CPO - he or she needs to be passionate and aspirational about what procurement can achieve, so that they really set the right tone and make it an exciting place to work.
Some CPOs spend time at business schools, teaching or sharing their experiences with MBA students, and perhaps offering them internship-type programmes. That seems to me to be a great way of encouraging high-flyers to choose procurement as a career option.
Another good approach is marketing yourself internally - not least by being seen as dynamic professionals who are involved in big projects and deliver big results - so that good people working in other functions want to join you.
When it comes to development, I see companies that have great management training or coaching programmes for their procurement staff and who really stretch them by giving them a lot of responsibility on specific projects or initiatives. Those things are obviously important in retaining people.
Ultimately, though, CPOs need to be realistic enough to accept that some of their most talented people are probably going to want to move out of procurement after a few years, either to run businesses as general managers or to get experience in other functions. The most enlightened CPOs I know actually encourage it and are proud of their track record in developing people, whether it’s for their organisations or others. They also realise that in the process they are helping to spread the procurement message, because those individuals will be “ambassadors” for the profession in the future.
SE: On the subject of talent, what skills are most in demand among European supply management organizations?

I would say analytical and communication skills, relationship-building and influencing skills, and project management skills. European companies want business-savvy people who can look beyond their own functional requirements, think strategically, empathise and work cross-fuctionally with internal stakeholders, and then execute successfully at an operational level. Passion and confidence are other “softer” attributes that are in high demand.
Increasingly, the view is that bright people can “learn” procurement pretty quickly. That doesn’t mean they’ll be good at everything, and you still need strong negotiators and reliable transactional people, but without these other skills you’ll find it hard to broaden the role of your procurement
group.
SE: Technology is playing an increasingly important role in enabling better visibility, control, and efficiency required for procurement transformation. What are the technology areas most in demand among European supply management organizations? And why?

Spend visibility and analysis is certainly high on the list; many companies are still struggling with that. Supplier performance and relationship management capabilities are there too. But I still see lots of organisations trying to extend the reach and usage of their e-procurement applications, so that they can increase compliance and get better data.
The mood at the moment seems to be one of evolution and incrementalism, rather than big leaps forward. Europeans may have been more cautious than Americans about adopting procurement technology, but that doesn’t mean they have been any better at implementing and using it fully. There are still plenty of opportunities for companies to automate their purchase-to-pay process.
E-invoicing and payment has been neglected in the past, but is now seen as an area that has to be addressed.
SE: In your opinion, what does the procurement or supply management function look like in Europe five years from now?

The most advanced functions will have C-level people leading them - not, in most cases, on the main board but certainly reporting to somebody who is. They will be highly influential people who ensure that their teams are involved in all the important sourcing discussions and decisions, and who have broader strategic responsibilities than currently - for example, in M&A or outsourcing projects.
At the corporate level these functions may be more centralised than at present, but I also think they might have fewer people working in them. British Airways, for example, has gone from 300 people to less than 100 in five years, as a result of the cost pressures in the airline industry since 9/11. Benchmarking shows that best-practice functions tend to employ fewer, more capable people, hence as more companies get better at procurement it follows that they will lower their headcount. 

I certainly expect many more companies to separate out transactional work, such as handling purchase orders, whether it’s putting people in shared service centres or outsourcing their work to third parties. Overall, I think the recognition and reputation of procurement and supply management functions will continue to grow, but in many companies and industries it’s going to take a lot longer than five years for them to reach their full potential.
Thank you, Geraint. The old adage is true, the more things change, the more they stay the same. Or, in this case, look the same.

As issues like globalization, outsourcing, and sutainability put supply management on the corporate agenda, the best-practices employed by organizations — whether in Detroit or London — begin to converge. Global sourcing, skills management, and organizational alignment are issues that transcend geography and industry. I look forward to CPO Agenda’s continued investigation of these and other pressing global supply management issues.