In this VIDEO Rob O’Byrne talks to Craig Lardner, interim Managing Director of CIPSA about some of his best procurement tips of 2013.
You know when you start talking about different functions within the Supply Chain, one that I find that people get confused about very often is Procurement. Hi, this is Rob O’Byrne from Logistics Bureau and today we’re going to talk to an expert in Procurement. We’ve gone to the very top, this is Craig Lardner who is the Interim Managing Director for CIPSA, which is the Charted Institute of Purchasing and Supply Australia.
So Craig, thanks very much for having a chat with us today and while we’ve got the expert with us. I think I’d be very interested to know what you think or perhaps the three things that you continue to really see people get wrong about Procurement? And maybe we can give our viewers a couple of tips.
Sure, the list of things to get right is quite a long one and sadly the list that we get wrong is just as long. It’s usually the opposite of each other.
But I think the 3 that really stand out for me would be first of all is Definition of Value, I think in the 1970’s and 1980’s, value is seen by Procurement people or sometimes called ‘Buyers’ back then as being the ‘price only negotiator’.
As we look at 2013 and beyond, I think it has gone much broader so it’s good that Procurement has matured, professionals in it have matured, they look broadly across the business beyond just price. They key word is ‘Value’ and if they can define what value is in there organisation they can deliver more often.
If they limit their work and negotiations with the Supply Enterprise to price only they’re going to sum up all with work performance because the price discussion is just a short one, it’s not a pleasant one often but it’s too short and it doesn’t explore all the values that organisation can get from its more mature suppliers.
And I think the evidence that I have folks, is that all the good ideas in the world are coming from 3 places: they come from your own organisation and the people in it, they come from the market – called your customers and the third areas is your suppliers. And all to often in the old world, that last one was always that one that is missed, and sadly today it still missed.
Do you still see some quite adversarial relationships, I see businesses where people are not so much focused on Procurement – they really are buyers and it’s all about the unit price but the industry I think has come a lot further in the last few years.
It has but it takes two to tango.
You know, where I see those conflict discussions between supplier and the customer it’s often brought on by the supplier who only sells that way; and if you sell that way, the buyer will only buy that way.
So I think the innovation level from the supplier, if you’re procurement professional look for that other 1/3. What’s the innovation that you can get from your suppliers? And reward good behaviour, reward with the business if they bought more value to your organisation than just price.
I think the 2nd one, actually speaks to the people. It’s the talent development, the capability development. And if you think about the example I just gave you a minute ago on price and price negotiating, if that’ the capability that your procurement team have that all you ever see them display, therefore, we need a procurement team that has more business acumen, think more broadly about the business and as a consequence their capability can deliver more than just a single dimension of negotiation and outcomes.
And I think the best step forward leaders can make ,is to bring their procurement team forward to the modern age is to have a competency framework, to actually define one of the competencies I want to find in the people I want to hire, and when I find them I need to recognize those competencies and bring those people into the organisation and then have a measurement to choose you whether you’ll be a bit short and helped them grow and develop as professionals.
So that second area would be around building the team’s capability and the last word of that team capability one; is you do everything right, but if get that one wrong you’ll be a B grader.
I think the 3rd area is more on philosophical approach and I would always advocate in the organisation where I have worked over time that I have spent in procurement, it’s better to make someone a hero rather than be a procurement person; that one is around beating your chest to get that one great deal you just did, let your stakeholders take the glory, let them be the heroes.
Because by the end of the day, the money you spent as a procurement person isn’t your money, it’s the money of your organisation. And the profit and loss statement that you are just spending belongs to a stakeholder or a colleague in production or operations or the transport department or engineering, and it’s their money that you are spending. And as a consequence if you spend it well, let them enjoy the benefits of that – don’t grand stand, suppress the ego, let them enjoy the benefits of your fine work. And I think the proverbs I’ve long lived by is that the more people I help to be successful the more successful I can be myself.
That sounds good to me. Craig that’s excellent, just a very quick hit. You’re in Procurement and that’s some really great tips and I should point out that Craig is not only the interim MD of CIPSA but you a have a long and very experienced career in Procurement as a Chief Procurement officer in a very large organisation, so we’re really getting some tips from the top. Thanks Craig.
Glad to do it Rob.
For more information about CIPSA, go to: Chartered Institute of Procurement & Supply
Craig Lardner can be contacted through Email.