In recent years, the world has faced significant upheaval from supply chain disruptions, geopolitical tensions, technological advances, evolving consumer needs, and new sustainability commitments and regulations. These changes have proven to be structural rather than temporary, heralding a new economic era characterized by volatility, regionalized supply chains, AI dominance, and talent scarcity.
To thrive in this new environment, organizations are embedding agility, technology, and innovation into every aspect of their value chains.
Procurement’s contributions are mission-critical. And so are its people. Organizations must take a people-first approach to drive lasting change. Here’s how.
Building A Winning Procurement Team
Procurement practitioners navigate a highly dynamic environment where acquisitions, mergers, bankruptcies, economic shifts, risks, and regulations can alter both daily operations and strategic approaches. The ability to adapt to this ever-changing landscape distinguishes successful procurement professionals from the unremarkable.
Winning teams that deliver strategic and financial value, despite the headwinds, are comprised of flexible, forward-thinking individuals who are just as capable of developing long-standing value-based relationships as they are of driving ESG or digitalization initiatives.
Rather than hiring based on direct experience, consider an employee's or potential employee’s personality traits, potential and past achievements:
Are they inquisitive?
Are they creative?
Are they resilient?
Are they coachable?
Is the employee a high-performer who thrives under challenge, a strategist who can develop a competitive supplier landscape, a creative thinker who’s quick to offer solutions to pressing problems or an analyst who can leverage spend data and AI for cost (and other) improvements? These are the kind of people a modern procurement team will need on their bench.
Although your exact requirements will differ based on context, by focusing on traits and skills that are difficult to train, procurement leaders can open the door to potential candidates they may have otherwise mistakenly overlooked.
[Source: Canva]
How to Build a Dynamic Procurement Function
While hiring the right people is important, there are several other effective strategies to consider.
From leveraging internal talent shifts to balancing the unique demands of direct and indirect procurement, there are various ways to ensure your team has the necessary capabilities. By exploring these different approaches, organizations can create a resilient and dynamic procurement function that drives success.
So, Who Should You Be Looking To Recruit?
People people. Procurement is rooted in relationships, whether internal or external. Aligning with stakeholders, ensuring engagement on initiatives, becoming a “supplier of choice” with preferential treatment and negotiating the best possible price and terms with suppliers all require people who intrinsically understand how to nurture long-term, mutually beneficial relationships.
Remember, category expertise can be trained, but a winning personality that truly connects with people and extracts their best efforts cannot. Nor can you turn a laggard into a leader. It’s best to work with personalities and inherent capabilities rather than against them.
The nature and function of procurement is changing. Once a stodgy function that was slow to change and solely focused on cost-savings through browbeating, procurement is now the driving force of company-wide initiatives.
However, the journey to sustainable, digital, competitive, yet resilient supply chains isn’t one found on Google. It must be carefully mapped out by those capable of finding their way.
Structuring Your Procurement Team
Overcoming cultural and organizational barriers to change and fostering a culture of innovation, collaboration, and continuous improvement may involve restructuring your procurement team, developing talent, and strengthening relationships with internal and external stakeholders.
To develop a structured team composition tailored to your organization’s procurement needs, consider roles such as sourcing specialists, category managers, procurement analysts, and supplier relationship managers to ensure a balanced mix of skills and expertise that align with your overarching company objectives.
Prioritize digital competency. The competition for digital talent is stiff. Procurement teams must attract and nurture candidates with the analytical skills and data competence needed to unlock value from more agile operating models and digital ways of working.
Identifying Top Procurement Talent
One of the initial stages in developing a winning procurement team involves identifying the right talent.
It may be time to rethink how you hire. Step outside the procurement box and consider shifting talent from other areas of the business. And, where it makes sense, hire for traits, train for skillsets, sourcing talent based on personality traits and soft skills rather than direct experience.
Depending on the available positions and required experience, companies often find success by hiring from their pool of college interns or internal departments.
While these employees may be more entry-level and require more guidance, assigning them a mentor or project manager can help them acclimate. A formal mentorship program not only reflects your investment in their growth but also enables them to learn valuable best practices.
Mentorship programs are especially critical for companies dealing with an aging procurement workforce. These programs facilitate the transfer of knowledge and experience from seasoned professionals to newer employees, ensuring continuity and growth within the team.
The Benefits of Promoting From Within
If you’re looking to fill a direct procurement position that requires in-depth company knowledge, have employees chomping at the bit to take their next career step and feel the soft and some of the hard skills you need may already be available within your indirect team, it may be time to promote from within.
Here are some of the benefits.
Promoting internal employees may help attract new hires and retain existing ones.
According to the 2023 CIPS/Hays Procurement Salary Guide, 61%
of professionals said career progression is the most important factor after salary. A lack of career growth is actually one of the most common reasons workers report leaving their jobs. In fact, 63% of respondents in the Pew Research Center survey cited no opportunities for advancement as a reason why they quit their jobs.
When companies promote from within, it can be great for morale and employee engagement. Employees see opportunities for growth within their organization and are less likely to bound around, hoping for faster advancement. It’s also just a good look for your brand. People want to work and buy from companies that value their existing employees and are dedicated to supporting their career progression.
It’s cheaper.
It’s been estimated that, on average, it can cost a business six to nine months' salary to replace a single salaried employee. More difficult-to-fill positions could cost even more. It’s likely also faster, although average time-to-hire depends on the industry you’re in and the exact role you’re filling.
There’s less risk.
According to the 2022 Job Seeker Nation Report, 30% of workers have left a job within the first 90 days of starting.
No matter how good your hiring process is, you really never know if an employee is going to be the right cultural fit or even a good fit for the role.
Whether direct or indirect, unlike new hires, current employees can leverage their pre-existing internal relationships to align with stakeholders on priority setting and gain engagement on initiatives.
Some research shows that external hires are also more likely to be laid off or fired within the first two years of employment.
Although there are exceptions where you will absolutely need to hire someone with specific category or industry experience, if you find someone who excels in indirect procurement, has taken the initiative to implement process improvements or achieved significant cost-savings, don’t let the lack of direct experience stop you from considering them for a role in direct procurement.
Direct vs. Indirect Procurement
Direct procurement requires a holistic approach and involves fostering long-term relationships, dealing with global suppliers, and undertaking large strategic initiatives, including risk mitigation strategies, sustainability, and innovation.
Depending on the industry and maturity level, indirect procurement, for some, is much more transactional and highly responsive, often dealing with spontaneous spend. With little visibility on requirements, procurement happens at time of need with little to no pre-planning or budgeting.
For others, for example, in aerospace, indirect procurement is highly advanced in its ways of working and nearly (if not as) strategic as direct procurement. In those cases, the differences in skill sets between indirect and direct procurement personnel may be negligible or better determined by category.
As a baseline, core transferable competencies of an indirect procurement person include:
● Purchase order preparation and processing
● Order tracking and follow-up
● Bid preparation
● Supplier vetting
● Supplier evaluation and selection
● Defining complex business and technical requirements
Strategic competencies you may need to train:
● Procurement strategy building.
● Supplier negotiation.
● Supplier relationship management.
● Contracts management.
● Vendor management.
● Building stakeholder engagement.
● Managing complex and competing stakeholders.
Hiring, training, and developing a winning procurement team is crucial in today's competitive environment. A skilled team ensures efficient sourcing, cost control, and supplier management, driving organizational success. Investing in procurement talent fosters innovation, resilience, and strategic advantage, enabling businesses to navigate market challenges and seize opportunities.
Investing in Procurement Training and Development: A Strategic Approach
Investing in a comprehensive training and development program is critical to building a high-performing procurement team and driving organizational success in today's tight marketplace, boosting employee morale and engagement and leading to higher retention rates and a more motivated workforce.
An employee training and development program not only enhances skills and productivity but also acts as a powerful magnet for attracting top talent seeking growth opportunities and professional development.
Here’s how to build one:
Identify your growth areas: Evaluate your current procurement performance and identify gaps and areas for improvement using surveys, interviews, audits, and self-assessments. Prioritize the most urgent needs and goals for your procurement function.
Define your learning objectives: Set SMART goals for your procurement staff that align with your organizational strategy. Examples include improving negotiation skills, reducing defects, increasing cost savings, or enhancing supplier relationships.
Design your training program: Use a mix of formal and informal methods, such as classroom training, online courses, webinars, workshops, coaching, mentoring, job shadowing, and peer learning. Select methods that are relevant, engaging, interactive, and practical.
Implement, monitor, and evaluate your program: Plan and schedule activities, assign roles and responsibilities, communicate clearly and regularly, provide support and feedback, and track and measure progress. Ensure your program complies with all legal, ethical, and contractual requirements.
Implement improvements: Follow an iterative process to ensure continuous growth. Collect and analyze data and feedback, assess program impact, identify strengths and weaknesses, engage participants, update training materials, and regularly refresh the program.
Other considerations: Other factors to consider include embedding resilience, innovation, and sustainability into your organization through integrated training programs. Equip your employees with the skills to manage disruptions and prioritize effectively, empowering them to make informed decisions swiftly. Clear communication of organizational goals and processes enhances agility and ensures cohesive action.
Final Notes
Creating a winning team requires intention, effort and strategy. The term team building can conjure the idea of activities like trust falls and escape rooms. Although promoting bonding is a good idea, and light-hearted activities are good to add to the mix, creating a healthy team with “winning” behaviors takes a much more comprehensive approach.
Building a successful team involves choosing members with complementary skills and relevant expertise and then fostering connections among team members that inspire creativity, problem-solving, and collaboration.
Personality assessments like Myers-Briggs which is “designed to help people identify and gain some understanding around how they take in information and make decisions, the patterns of perception and judgment, as seen in normal, healthy behavior” can go a long way in helping you build healthy team behaviours.
Well-respected author of "Building High-Performing Teams,” Patrick Lencioni, also offers effective team-building activities to enhance trust, communication, and collaboration within teams. As the author states, “A healthy organization will always find a way to succeed, because without politics and confusion, it will inevitably become smarter and tap into every bit of intelligence and talent that it has.”
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