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Category: Procurement and Sourcing

Supply Chain News: Procurement Discipline Needs to Upgrade Skill Sets, New APQC Report Says

 


Business Ethics and Communication Skills Top the List

 

Dec. 11, 2019
SCDigest Editorial Staff

By most counts, procurement as a discipline and its standing as a function within the corporation have made significant progress over the past two decades.

But the supply chain world and larger business environment continue to change rapidly. And the skills of procurement professionals are struggling to keep up.

Supply Chain Digest Says...

Negotiation skills have of course been recognized as key to procurement success factor almost since the discipline began, but views on negotiating practices need to evolve.

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So says a new report from supply chain research organization APCQ, titled "Identifying and Developing the Future Skills Needed in Sourcing and Procurement." It is based on survey responses from 204 global procurement professionals, supplemented by focus group sessions and one-on-one interviews with procurement professionals.

Based on the survey responses, the report identifies the top skills needed across different areas, such as basic job skills, business acumen and more, It then aggregates those responses to develop a list of the top skills across categories.

The top 10, led by business ethics and number 2 communication skills, are shown in the graphic below.

The rest of the report then looks at each of these 10 skills in more detail. Highlights of that commentary is provided below.

The report connects business ethics in procurement directly with Corporate Social Responsibility.

It cites the example of McDonald's, which is a world leader in moving to use only Marine Stewardship Counsel (MSC) certified sustainable fish for its products.

The report says that "McDonald's didn't take the easy route. It could have switched to established MSC certified suppliers, but instead, it worked with its existing suppliers to make the improvements needed to achieve an MSC certification."

 

Source: APQC

 

That move also sent a strong message to fisheries worldwide by one of the largest fish buyers in the world.

The report also cites the European Union's Late Payment Directive, which aims to achieve "a decisive shift to a culture of prompt payment" and requires companies to pay interest and reasonable recovery costs to the creditor if they do not pay for goods or services on a timely basis (60 days for business.)

A key question: How do you teach business ethics? The report notes that some organizations produce a procurement ethics manual, though the depth and style of these publications varies widely, but doesn't really further answer the question.

With regard to communication skills, the report notes that the traditional RFI (request for information) and RFP (request for proposal) approaches are being expanded, using more collaborative Request for "X" tools, for example, "Request for Solution" and "Request for Partner"

These techniques are used to better align stakeholder and suppliers during the bid process.


(See More Below)

CATEGORY SPONSOR: SOFTEON

 

Key to that collaboration is just doing a better job of listening, the report says. It quotes Jeroen van der Rijt, an expert in competitive bidding and partner at the Best Value Group, as saying that "Many companies still would like to manage, direct, and control suppliers. When you listen and observe, you will get a much better understanding of what a supplier truly is able to do. When given the opportunity, suppliers can astonish you with their expertise."

Negotiation skills have of course been recognized as key to procurement success factor almost since the discipline began, but views on negotiating practices need to evolve, the report says.

Specifically, the style used in most negotiations with suppliers is transactional in nature and on the strategies and tactics for negotiating the "deal," the report says, adding that "The negotiation mindset has historically been about "this deal," "this time," and under "this set of business and legal terms." Negotiators think: "Get a signature, and you are done." It's a done deal, and the deal is the deal."

That style, the report says, creates a systemic problem: Transactions are quick, short-term exchanges. The deals they create are static – while the business environment is not.

"Static deals often get out of equilibrium, where the deal is no longer perceived as fair by one or both parties," the report notes, adding that "Business headlines are littered with stories of good "deals" gone bad."

At a minimum, the reports notes, the individuals involved in the process have increased frustration and companies are burdened with increased transaction costs. When this happens, the parties find themselves back again at the negotiating table under new circumstances – often a waste of time and money that could perhaps have been better spent creating innovation and growth for both parties.

There is a lot more data in the report, which can be downloaded with registration from the APQC web site: Identifying and Developing the Future Skills Needed in Sourcing and Procurement


Do you agree with this list of top procurement skills for the future? What would you add? Let us know your thoughts at the Feedback section below.

 

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