6 Key Skills Every Sourcing Professional Needs Today
The role of procurement has evolved greatly over the last decade, especially after the financial turmoil of 2009. The focus on savings is always there, but procurement is not just focused only on savings any more.
Procurement in today’s world needs cross-functional collaboration. CPO offices are increasingly being asked to be involved in new product development as well as mergers and acquisitions’ evaluations. A recent Deloitte 2014 CPO survey stated the following:
“Some 57 per cent of this year’s respondents state their teams do not have the right skills to execute the CPOs vision, compared with 48 per cent last year”
So what do procurement professionals need in order to excel in today’s competitive environment and to meet the ever changing expectations from senior management?
1. Soft Skills: In the latest CPO study by Deloitte, the majority of CPO's identified soft skills as one of the key areas where their teams needed to improve. Let’s face it, people like to work with people who are nice. I am not saying that you have to please everyone, but having a strong relationship with your stakeholders greatly helps in meeting organizational goals and in increased collaboration across the board. Focus on the following:
Relationship building: Build strong relationship with key stakeholders. There are bound to be people who don’t like you and vice-versa, so focus on the key stakeholders. They need to see you as a trusted partner.
Empathy towards stakeholders: Listen first, talk later. Be a good listener and develop empathy towards your customer’s needs. Empathy doesn't mean being a yes man, but relate to the problem and come up with an optimum solution.
2. Analytical Skills: Negotiating with vendors and internal stakeholders is a core function of sourcing responsibilities. Strong negotiators negotiate based on facts and not on gut feeling. Having said that, it is a no-brainer that you need to have strong analytical skills to dissect the data in order to come away with hard facts. Focus on the following:
Basic data analysis: Excel is your best friend, starting from basic data analysis using pivots to running what-if conditions. If you want to improve your basic Excel skills, you can always look at generic courses or something specific to sourcing, such as the Next Level Purchasing course.
Should cost models: Whether you are handling services categories like OutSourcing or you are buying widgets, Should Cost models is a great way to conclude on a fair price to pay for a product or service.
3. Financial Aptitude: Procurement is converging with the finance organization, It is not uncommon nowadays to have the CPO report to the CFO. Given this recent trend, it becomes imperative that sourcing professionals are aware of the key financial terms and the impact on sourcing strategies. I’m not saying that you have to be an accounting wiz, but you should understand key terms. Focus on the following:
Cash flow: Cash flow is the lifeline of the company. It is imperative to understand the impact sourcing has on helping cash flow. It is important to know how payment terms, extensions, or moving vendors to an alternate payment method impacts the cash flow of the company. If this is new to you, the best way may be to contact a colleague in treasury and take them out for coffee.
Cost of capital: Understanding your company’s cost of capital will greatly help in defining strategies around lease vs. buy, third-party financing, setting up payment schedules, etc.
Income statement: Understanding the income statement is a key skill, which will help you in effective supplier selection. Selecting the right vendor is not only about the right product at the right price; it involves the long-term financial viability of the vendor.
4. Research: A key skill for any sourcing professional is to find the right source of supply. It is one thing if you are a category expert. In that case, you would know the sources of supply. However, if you are dealing with a new category, then you should be able to identify the key players in the market quickly. Focus on the following:
Supplier discovery: There are a lot of old supplier registries like Thomasnet, which could be a good source for finding new suppliers. Lately, supplier networks, such as Ariba Supplier network, have become good sources for supplier discovery. However, most of the time that is not enough, especially when you are dealing with non-commodities. Start identifying and building up your own techniques and resources to find new suppliers. For example, LinkedIn has become a good source for identifying new suppliers.
Market trends/long-term trends: It is key to identify the short-term and long-term category trends. You can read industry journals and subscribe to various category reports.
5. Domain Knowledge: Is it important to have domain knowledge, whether it is industry or category specific? The answer is yes or no depending on the industries. For example, In the pharma industry, if you are dealing with organizing clinical trials and are responsible for managing the partners, then it is very critical that you understand the pharma industry along with the nuances of the legalities involved with it. Nonetheless, it doesn’t harm to build category expertise.
You can pick the category that is more valuable in your industry vertically, or you can focus on building expertise in areas that are in high demand, such as, IT professional services sourcing in the financial services industry.
6. Technology Savvy: Technology plays an enabler role and helps sourcing teams to reach their goals faster. Most of the Best in Class companies have deployed and adopted technology like Spend analysis, Esourcing and P2P to automate their functions.
You don’t have to be a technology guru; however, understanding how these systems work and developing hands-on experience with these tools are essential for success.