Earlier this year, and again at the Institute for Supply Management’s 102nd annual conference in Orlando, Florida, Ardent Partners analysts were pleased to interview M.L. Peck, ISM’s Chief Content and Engagement Officer. M.L. has been with ISM for more than 12 years and, as a result, fluently speaks to the myriad business challenges and opportunities that procurement and supply management leaders and practitioners encounter today. Our conversations spanned several different but related topics, like how global instability affects global supply management, which was a major topic at ISM 2017; and How ISM is Reaching, Retraining, and Retaining the Procurement 4.0 Workforce. Today’s article, how procurement can lead the way in an uncertain world, is the last of three articles from our conversations. We hope you’ve enjoyed reading them as much as we’ve enjoyed writing them.
Uncertainty, Risk, and Disruption — It’s Rough Out There
Turn on the TV, scan social media feeds, or pick up a newspaper and one thing will be obvious: the world is a dangerous place fraught with uncertainty, risk, and disruption. Climate change (man-made or not) is sweeping the globe. Diseases are spreading from the developing world to the developed world. Civil wars are raging in multiple countries on multiple continents. Alliances form, crumble, and then switch sides. New and old world powers are rising or rising again, while others are in decline. Populism is popular again. Changes to trade, immigration, and environmental regulations are disrupting national and international economies. Child labor, human trafficking, modern slavery, and unsafe working conditions are now First World problems. Low-cost countries may not be so “low cost” anymore. Jobs that were lost to automation or outsourcing may be returning but not quite the way they left. Baby Boomers are retiring and Millennials are rising. Artificial Intelligence is becoming a reality. Industry 4.0 is here. The Future of Work will arrive shortly; and for millions of “gig-economy” workers, it has already arrived.
While there is some debate over whether the world is a more dangerous place now compared to other times in recent history (after all, social media, digital media, and 24/7 news networks provide us with non-stop coverage of the same events), the business world is fraught with disruption, risk, and uncertainty. The “Butterfly Effect” — the idea that a small and seemingly insignificant event that occurs halfway around the world could have a large and significant impact on you or your business — is a very real concern. Globalization has long since made the world a much smaller place. What were once purely political or geopolitical events and dangers can now cast doubt on the short term continuity of operations and the long-term sustainability of business operations. Enterprises must care about and be proactive with the state of the world today, including how fast technology and business innovations are changing.
Why Procurement is Best Positioned to Lead the Way Forward
As business leaders, Chief Procurement Officers (CPOs) and other supply management leaders must take the good with the bad, turn lemons into lemonade, and see opportunities in a crisis when others see dangers. They cannot change the world (many try and some succeed), but they can take the lead within the enterprise to overcome or make the best of the risks, challenges, and disruptions that they see coming. For nearly a decade, procurement’s role in general and the CPO’s role, in particular, have been converging across the enterprise and taking on (or influencing) other business responsibilities. These include enterprise risk management, financial management, human capital management, supply chain management, technology evaluation, and myriad other traditionally siloed business functions and units. Now more than ever, the prototypical CPO is like a Swiss Army Knife: they have many tools, perform many functions, and can be pretty handy in a pinch.
Not surprisingly, M.L. Peck of ISM believes that procurement is best positioned to lead the way forward for enterprises on myriad risks and disruptions, like changing trade regulations, the changing face of the workforce, recruiting, developing, and retaining Millennials to backfill Baby Boomers, and adapting to Industry 4.0 (or, more specifically, Procurement 4.0). CPOs and their teams have already been taking the lead on driving corporate social responsibility (CSR), supply chain risk management, sustainability issues, and other supply risk issues. Who better than the CPO? As M.L. said, they should really be the “Chief Risk Officer” because “that’s where a majority of your risk is.” As a result, CPOs and procurement teams are on deck to steer the enterprise through some pretty dicey waters; many have been doing it for quite some time.
This is not just a great opportunity for CPOs to champion responsibilities that they have already had; it is an opportunity for procurement as a whole to add even more value to the enterprise. For example, because an enterprise’s supply base can introduce significant cyber security risk to the enterprise, it is up to the CPO and procurement — not the CFO and IT — to evaluate a supplier’s cyber security risk profile and measure its performance and risks to the enterprise. While it may be “one more thing” for the CPO and procurement to do (the danger), it can also be a competitive differentiator (the opportunity) when positioning the enterprise within the market. CPOs and their teams can help the enterprise become a more resilient, secure, and sustainable partner and player in a given market.
CPOs and procurement teams can also be some of the first enterprise users to work with cognitive, or “smart” computing technologies — those that are driven by automation, Big Data, machine learning, natural language processing, and other technologies and innovations. Cognitive/smart business solutions are coming online and are available today; they are user friendly and can (or should) allow even novice users to slowly and confidently experiment with Procurement 4.0.
Taking a macro-level view, M.L. believes that “there are huge, endless opportunities for the supply management field right now,” and that it is an exciting time to be in the industry. It is a point that Ardent Partners analysts have been making for a few years now, despite (or perhaps because of) all of the uncertainty, risk, and disruption (read opportunity) in the business world. Rather than fear them, smart CPOs and procurement pros should embrace them and turn risk and uncertainty into business value.
Post Script: Ardent Partners is planning its own procurement and supply management conference, CPO Rising 2017, in Boston on November 8 and 9. An event for and by CPOs, CPO Rising 2017 will cover many topics, including managing global supply risk and being a value driver for the enterprise. Don’t delay – register now and take advantage of early-bird registration (ends July 31).