Late last month I had the opportunity to attend the 27th semi-annual Supply Chain Resource Cooperative meeting at NC State.  For those unfamiliar with the Cooperative, it is a partnership between NC State and a group of large businesses, built to help develop and nurture the next generation of supply chain professionals.  Besides getting to meet the students and learn about the projects they have been working on, the meetings include presentations from some cutting edge supply chain professionals, and the topic for this event was “Future of Procurement”.

As a Supply Chain professional, I consider these presentations my version of the TED talks, and I was not disappointed.  There were plenty of great concepts presented, but a few weeks later a few really stuck with me.

William Knittle, Global Procurement Director for BP weighed in on his approach to creating a comprehensive (and value-added) supplier management program.  Key takeaway – all suppliers require management, but not all require the same level of management.  BP has four tiers of supplier management, and determines the level a particular supplier requires based not just on spend, but also supplier segmentation (Leveraged, Strategic, etc) , current working relationship and the supplier’s willingness to work on an innovative/strategic basis with BP – which can mean changing the way they do business.

Ronald Reising, VP and CPO of Duke Energy, discussed the organizational structure of the procurement group at Duke, which includes functional procurement operations tied to the business unit, along with “Centers of Excellence and Support” that allow the procurement function to more strategically align their goals with the organization as a whole.

Pat Murzyn, Director of Procurement Excellence at Caterpillar, Inc. talked about procurement transformation at CAT, which included staffing his team with a videographer to help market the value procurement can bring to the organization.  In my favorite analogy from the conference, Pat compared procurement transformation at CAT to the butterfly metamorphosis process (this works on many levels).  While I can’t give his description justice, the basic concept is that the transformation is going to look much uglier before you start to see an improvement.  Mr. Murzyn also aptly gave the group the proper starting point for transformation – data.  If you can’t measure it, you can’t show improvement.  This time, his analogy was that of a 17th century surgeon taking out his scalpel and starting to cut.  Sure, something is going to happen, but it might not be good.

Outside the presentations, several other things stuck in my mind from the conference.  First, the titles.  The folks I met at this conference had titles such as “Procurement Excellence Manager”, “Supply Chain Knowledge Manager” and “Director of Vendor Analytics”.  These titles reflect the changing environment, but also lead me to wonder, what’s in a name?  If we don’t back up these titles with new processes, clearly defined objectives and the right skillsets, their meaning will quickly deteriorate.

Second, I heard a lot about how all students in the supply chain group are required to take several accounting and finance classes beyond the 100 level courses.   Teaching accounting to the supply chain folks makes sense, particularly since over 80% of the meeting attendees report to the finance group – speaking the same language is important. 

One common theme that came up multiple times at the conference was the challenge of publicizing procurement’s value in the organization, and how to change the perception of supply chain/procurement/sourcing from that of a tactical cost cutter to a strategic partner, focused on value.  There weren’t a lot of direct answers to this question, as the roadmap for procurement transformation depends on where your organization is starting from.  One thing is for certain, future supply chain graduates will need to add marketing classes to their curriculum.

For those that haven’t attended an SCRC meeting, I highly recommend it.  The program is led by Dr. Robert Handfield, and he and his team are truly creating a generation of supply chain professionals that will be able to address the Future of Procurement in ways have yet to be considered.  Based on the foundation being built at NC State, the future does look exciting to me.
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Joe Payne

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  1. When an organization needed one or two phone extensions, it had few choices for telephony services. You install PBX ( Private Branch Exchange ) at the facility and passed out user manuals full of hard to fathom keypad combinations for various call functions. You can now combine analog and digital calls by switching to VoIP ( Voice over IP ) phone. Now you have two choices. You can choose between an on-site IP-based phone system including an IP PBX or a cloud-based service hosted by a telephone provider who delivers the functions over the internet. There are 10 rules to follow before you choose the telephony system for your organization.

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