Human talent, not technology, still the critical factor in procurement

According to 1st Executive, the human element, rather than technology, is still the critical factor in the procurement process. The specialised procurement and supply chain consultancy argues that the human factor is increasingly overlooked in the procurement process, in favour of automation. 1st Executive has urged firms to review their existing e-systems, to ensure that they are maximising the potential of their suppliers’ specialist knowledge. The firm warns that, failing to do so, could mean that procurement misses out on opportunities to add value.

James Tucker, co-managing director of 1st Executive, commented that, “the vast majority of procurement professionals don’t just want to be seen as hard-edged negotiators who want to strike the best deal on price alone, they want to be recognised as relationship driven, and keen to create more visibility in the business, and develop inter-dependent relationships with their supply base. However, it’s become obvious to us that the systems and tools that many firms have in place, are actually working against them. Many e-procurement systems for hiring – for example – don’t take into account that some firms are sector specialists, and therefore have a deep – and much greater – understanding of the procurement market than the ‘generalist’ recruiter. It’s concerning that firms are relying on these systems, that clearly don’t calculate the full value that suppliers can provide.”

He maintained that “in the modern tech-led world, procurement can often hide behind a process, or piece of technology, and forget that business is essentially about relationships with people. If procurement wants to be recognised as a strategic function by stakeholders, it also needs to look at the value it adds, and communicate that effectively. We come across many procurement functions which are doing things the right way and winning the hearts and minds of key stakeholders, as well as recognising the value that their supplier base can offer, but it is by no means endemic.

To sidestep this issue, functions should solely focus on 100% value creation, and if we want to get to that stage, we need to understand how procurement truly creates value for the business. Once that proportion is clear, it’s about focusing purely on activities that support value creation, and removing those that don’t through automation. However, let’s not fall into the trap that many functions have done, and forget the importance of the human element. After all, there is only so much that can be automated. Ultimately, if you don’t get the right talent in, the vision of the 100% value creation is unlikely to ever become a reality.”