Don’t neglect your technology and analytics boffins in procurement

Big Data! It’s the catch-cry of 2015 and the movement shows every sign of gathering momentum. Article after article has been written on why your business can’t afford to ignore it, and the term has even earned itself a capital B and D, demonstrating just how excited everybody is about the concept.

Yet our benchmarking exercise shows that Australian procurement functions may need to recalibrate their thinking about the skill levels required by the two job-families every team needs before attempting to harness Big Data – technology and analytics.

As part of The Faculty’s 2014 research into capability assessments, research champions from 19 organisations participated in workshops to establish competency benchmarks for six job families within the procurement function: Strategic Sourcing, Category Management, Analytics, Operations, Supplier Relationship Management (SRM) and Supply Chain. The participants were asked to benchmark the competency levels (Awareness, Functioning, Skilled or Mastery) that they believed should be held by different levels of seniority across the above-mentioned job families. The results were then validated by The Faculty Roundtable, consisting of CPOs from 30 of Australia’s largest blue-chip organisations.

Neglect technology skills at your own risk

Two surprises came out of the results. Firstly, there was an anomalous gap at the principal level for the key competency “utilising technology and tools”. Have a look at the radar graph for Category Management (yes, I know the shape in the middle looks like a bird’s head):

Competency levels

1 – Awareness      2 – Functioning     3 – Skilled     4 – Mastery

Out of the six job families, only Operations had a mastery-level benchmark flagged for this competency. In practice, this means that the most senior staff across five job families in the procurement function were content to have no one in their team who were expert users of procurement-related tools. In the case of the SRM job family, the highest competency level for tech was only “Functioning”.

So, what are the possible reasons for this gap, and what are the risks of having a comparatively low benchmark for technology and tools?

Well, one reason may be that most organisations have a dedicated IT team to whom you can outsource your IT-related projects. The trouble with relying on this crew is that the IT team are not procurement experts. Having a scattering of tools-and-tech gurus amongst your own procurement team would be infinitely more valuable than working with an IT generalist, as the marrying of tech skills with procurement know-how can open the door to a potential flood of efficiency and innovation.

The second reason may be generational. At the risk of sounding ageist, we can assume that, generally, the most senior role-holders in your procurement team have more years under their belts than others and may be unwilling to engage with rapidly-changing technology. The tendency, then, may be to leave the usage of technology and tools to junior role-holders, with the risk that critical business tools are operated by staff who lack the experience (and seniority) to make informed decisions. Leaving the mastery of such skills to junior role-holders also means you are reliant on the advice of inexperienced staff or outsourced expertise when deciding on major technology investments, an area in which mistakes can be very expensive.

If the problem is indeed generational, then the good news is that the competency gap will resolve itself in time as technically-savvy members of Gen-X and Y step into senior roles. In the meantime, you might consider “reverse-mentoring”, where the junior in the relationship takes on the role of mentor to provide their senior colleague with up-to-date information and advocate the benefits of new procurement technology and tools.

Don’t neglect your analysts

A highly-skilled team of analysts is worth its weight in gold, yet the results from our benchmarking exercise didn’t reflect this:

Competency levels

1 – Awareness      2 – Functioning     3 – Skilled     4 – Mastery

Even a brief glance at the above chart shows that Analytics has a lower level of expected competency almost across the board, with the exception of “cost leadership” and “determining customer need”. This is concerning, given the vital role of this job family and the potential involved in harnessing big data to generate innovation. In practice, the chart above suggests that the most senior analyst in a procurement team is not expected to demonstrate leadership and only expected to have medium- to low-level competency in supply strategy and managing supply chain risk. To me, the benchmarks are more reflective of a non-specialising analyst (much like the IT generalists mentioned above) rather than a member of the procurement function who specialises in analytics.

The strong potential of a high-performing analytics team was demonstrated at the 54-hour “Unearthed Hackathon” in early 2014, where competing teams of number-hungry analysts were given access to Big Mining Data – specifically, transport, logistical, geospatial and geological proprietary data. One of the teams worked out a way to integrate technology into tray trucks that detects when boulders are too large for rock crushers and sounds an alarm to prevent potential blockages. The organisers estimated that this idea alone would save millions for Rio Tinto and other miners – yet it took these boffins only 54 hours to analyse and solve the problem.

We need to master both soft and hard skills

A recurring theme to come out of The Faculty’s capability research was the need for procurement teams to develop those hard-to-define “softer skills”; that is, leading, influencing and negotiating. At the same time, we cannot afford to neglect the “hard skills”, even at the most senior level when leaders step into a more strategic role. An enormous amount is expected of 21st-century procurement teams and we can’t be expert at everything, but if you’re going to neglect one competency to focus on mastering another, do your best not to neglect procurement technology, tools or analytics.

Finally, if you’re an up-and-coming procurement professional who also happens to be a master of tools and tech or an analytics whiz, I’d say you’re in a very good position for a stellar career.