There is an ongoing inside joke amongst my family and friends that despite my constant reminders, none of them are exactly sure what I do for a living. To my liberal arts friends I work in business, to my business friends I work in consulting, and even to my niche group of consulting peers the exact role of a procurement professional is opaque at best. The role of a strategic sourcing consultant is one that requires a broad knowledge base of business functions, and an only slightly tighter range of subject matter expertise. Consider this blog a freebie to the internship applicants who are slightly hesitant when asked what they know about the procurement consulting role.
So what types of skills and expertise enable success in a strategic sourcing role? Well, first one must become a Jack of:
Enterprise Software Platforms – A fundamental understanding of an organization’s procure to pay (P2P) model is critical for pinpoint areas of opportunity for streamlining workflows. Being able to identify and map the dataflow from PO creation through invoice payment, GL coding, and Key Performance Indicator (KPI) reporting is necessary to properly assess the value of procurement, and eliminate manual integrations which are hurting the bottom line.
Dashboard Creation and Reporting – Tracking KPIs is all but useless if the metrics are not being communicated in a clear, concise, and accurate manner. Procurement professionals must understand the metrics that are most valuable to the organization and ensure that those metrics are available to the key executives driving the organizational strategy. A well maintained dashboard delivers a valuable storyboard showing the successes and opportunities identified in the procurement space.
Culture Adaptation – Adapting to a client’s organizational culture is not a skill limited to strategic sourcing consulting. What is unique to this particular role is that the adaptation must flow from supplier to client and back to foster meaningful strategic partnerships. A strategic sourcing consultant must be able to clearly and appropriately convey a message to suppliers from family owned packaging operations to multinational technology companies.
Category Adaptation – While most procurement professionals have one or more specific categories of expertise, those in the consulting space must be able to adapt the sourcing process to categories that may be less familiar. The ability to perform efficient and effective market research is vital in finding opportunity in more obscure or less frequently sourced categories.
Interpretation of Product Specification and Requirements – Similar to category adaptation is the ability to interpret product specifications in categories outside of your immediate realm of expertise. While stakeholders can be relied on for the more technical aspects, a sourcing analyst should be able to identify gap areas in the documentation that may become a roadblock during a competitive sourcing process.
Essentially the procurement processional needs to have at the very least a proficient understanding of all areas within an organization that interact with procurement. As the value of procurement becomes more apparent across organizations these interaction are becoming more frequent and more intricate, leading to a competitive advantage for those ahead of the learning curve.
To fully take ownership of the various functions of procurement from identifying a need or opportunity to execution of a contract and the sourcing functions that fall between, a sourcing professional must be a Master of:
Data Analytics – A sourcing consultant must be able to validate data across multiple sources and reconcile to form a complete picture of current purchasing habits. This relies heavily on the ability to manipulate and summarize data while maintaining its integrity even in categories with complex pricing structures or thousands of SKUs of data.
Market Intelligence and Research – One of the most frequently terms in business, procurement being no exception, is the word “opportunity”. Utilization of market intelligence and research is key in identifying areas of opportunity prior to investing resources into a full sourcing initiative. Efficient use of this skillset reduces the risk of wasted resources on a project that does not have feasibility, and ultimately increases your procurement ROI.
Negotiation – Possibly one of the more obvious required skills, the importance of negotiation tactics cannot be overstated. A procurement professional must be able to approach negotiation from the standpoint of adding value both to the client and the supplier, and finding the ideal mix of leverage points to satisfy both parties and create the foundation for an ongoing strategic partnership.
Contract Development – While the legal terms are best left to the lawyers, the business terms are what drive the most value from the contracting process. Procurement professionals must be able to integrate knowledge of best practices in payment terms, additional pricing incentives, termination and auto-renewal clauses, and language specific to the product or service in question to secure the relationship and maximize value.
Ongoing Category Expertise – While being a Jack of all categories is an asset, a procurement professional should always strive towards achieving and maintaining subject matter expertise in a particular area(s). Many purchasing categories face frequent regulation changes, technological advances, commodity price fluctuations, and a multitude of other factors that require a dedicated subject matter expert to remain competitive as industry conditions change.
While this list is certainly not exhaustive, it does begin to offer some insight as to what types of skills and expertise are needed to support procurement functions on a daily basis. Certainly as procurement moves to the forefront of a business value driver, this list will only become more robust, and the need for experienced procurement professionals will grow.