The future talent shortage within the Procurement industry (Spend Matters)

The future talent shortage within the Procurement industry (Spend Matters)
Published: 2 September 2019

The talent shortage and talent management were again major topics of discussion at the World Procurement Congress in May. Yet, these are not new topics. The fact that this subject remains on the agenda for most leadership teams is what makes it more alarming. A 2018 CIPS survey found that 56% of employers are struggling to find talent, with this figure rocketing to 73% for senior leadership and executive positions, according to DHL. Tom Graham, a consultant in Berwick Partners’ Procurement and Supply Chain practice, investigates the reasons why this gap exists; why is there such a disconnect between what a business wants and what we think is available; and on whom is the onus to improve this? 

I recently spoke with Stephen Day, an international supply chain and operations leader, who shared his thoughts on this very issue. Stephen’s portfolio of executive roles within blue chip organisations include Cable & Wireless, Vodafone and Pearson. The discussion centred around three themes: 

  • the misalignment between a corporate strategy and a procurement strategy; 

  • the hiring of new talent vs the development of the talent internally; 

  • and talent pipelining for the future. 

The perception of procurement at an executive level is still a major issue. A recent study by McKinsey found many executives felt that procurement was a ‘back office function’, a claim supported by Deloitte who, in a recent survey, found that only 31% of the 504 respondents felt they were ‘highly supported’ by their procurement function. 

Changing Expectations 

The expectation of procurement is changing. Procurement leadership is challenged to develop strategies that map more closely to business priorities, delivering results in order to maintain high levels of executive support. I asked Stephen how this changed the dynamics when looking for talent. 

“Let’s just reflect for a moment on the alignment of the function as a whole to the corporate objectives of the business. How often does procurement actually align the strategic outcomes of the business with its own objectives? Not easy to do for sure, but it’s a necessity. As we transition away from a period of settled trade arrangements and low-price inflation, driven by the outsourcing to China, into a period of trade disruption, price inflation and increasing concerns on the protection of intellectual property and customer data, most procurement functions continue to focus on price savings (driven in part because it’s a tangible measure that shows the value of the function). Arguably, the function should be orientating towards building long term meaningful relationships with suppliers and become the ‘customer of choice.’” 

Stephen continued: “Before you can think about the talent you need, think about the challenges your business faces and what’s important for the long-term success of the firm. Once you have done this, you then have a better appreciation of the challenges ahead and the resources you will need to meet these challenges. Many times, the basic principle is not adhered to, resulting in an irrelevant function with board frustration at the limited progress on supplier topics, often misdiagnosed as a lack of talent.” 

A DHL survey recently found that companies excelling in talent management increased their revenues 2.2 times as fast and their profits 1.5 times as fast as ‘talent laggards’. 

However, Deloitte’s survey found that 72% of respondents indicated that they spend less than 2% of their operating budgets on training and development. In contrast, high performers are almost twice as likely to spend 4% or more on training. So, what can be done to better manage the existing talent we have, if current financial investment from the board is not as high as it is in other functions? 

Stephen believes the answer lies within our existing talent pools: “Let’s start thinking about talent within the existing resources available to you. In the search for new hires, have we forgotten the need to manage existing teams as a resource to be nurtured and developed? Do we put the team through regular development reviews, identifying areas of strength and areas to develop, think through functional rotation and invest in skills training? Systematically managing the existing talent should be as important as the strategy for external hiring. Perhaps the most relevant topic today is whether your function or your firm is an employer of choice, where existing talent feels that it can thrive, face interesting and diverse challenges and, of course, meet personal financial objectives.” 

Transferable Skills 

This is certainly an area where employers can do more. Currently, an estimated 25% of the supply chain workforce is at, or beyond, retirement age, leaving many procurement teams with an aging, un-qualified workforce. Statistics suggest that around 70% of procurement professionals felt there was a lack of career path in the function. Therefore, what can be done to entice more people into procurement at the start of their careers, and where can we find transferrable skills in other functions to join later on? 

“We need to think differently than we have done when it comes to talent pipelining. Encouragingly, things are changing. It was not so long ago that the primary route was through a degree via university. This is changing as employers offer a more modern form of apprenticeship, together with part time degrees. The challenge being, how do you engage with a younger talent pool so that you can steer them into a career in procurement and supply chain? 

As a profession, we should encourage rotation through the functions. Rather than looking externally for talent, there may be an opportunity to look within the organisation. Just imagine the power of seconding a marketing expert to work with the sourcing team, fixing the commercial arrangements with an advertising agency, or an HR expert working on a contingent workforce sourcing model. In my experience, this leads to much improved outcomes, particularly as you transition from sourcing to on-going contract and relationship management with the selected supplier.” 

The expectation of procurement has significantly changed, yet our approach to hiring talent and talent management, it seems, has not. Executive boards, with negative perceptions of the function, or CPOs who believe there is a skills gap in their team, may recognise a need to change, yet be unsure of what change should or could look like. Hiring is often done through a lens of fixing a particular problem, rather than maximising the opportunity to try something completely new. 

Until we have a fresh approach to talent, looking more widely at transferable skills, broader backgrounds and a less risk averse approach, this is a topic that we will continually discuss. 

For more information, please contact Tom Graham, a consultant in Berwick Partners’ Procurement and Supply Chain practice. 

*This article first appeard in Spend Matters in October 2019

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