Over the past month and a half, we’ve featured a series entitled, “Skills for the Modern Procurement Pro,” wherein we’ve defined 14 core procurement skills and discussed their importance to one’s department and career. We’ve also shared with you how CPOs graded their departments’ performance, and how procurement pros can improve their skills. We’ve received great feedback from Ardent Partners’ community over the past few weeks, so we thought we’d give you a high-level, two-part summary of the skills in the series. Today’s summary will feature the first seven procurement skills.
Data Analysis involves making sense of the high volume of data that is captured by systems across the source-to-settle process, including complex categories, supplier information, and relevant third-party data regarding supply, suppliers, and markets. When “Big Data for Procurement” is properly analyzed, it can yield actionable business intelligence by identifying trends and correlations that cannot be found with traditional data analysis tools and methods. For procurement professionals, the ability to analyze spend and other procurement data – in effect, to connect the dots – is critical for organizational success and ultimately career advancement. Unfortunately, CPOs today believe their staffs are just average when it comes to analyzing data. However, these skills can be learned fairly easily – either on the job or as part of sponsored training or professional development programs, which are everywhere. If you or your staff are lacking in this department, spend the money and get trained up – it’s worth it.
Financial Analysis, beyond an ability to analyze company financials, is an ability to understand and work with numbers. Doing the math, knowing your numbers, and making your decisions based on hard financial data will prevent you from making rash business decisions and help you make smart decisions for you and your company. Strong financial skills can be a great career differentiator; companies are always looking for smart people to crunch numbers and then tell the decision makers what it all means. Like data analysis, CPOs rate their teams as average when it comes to financial analysis. Fortunately, there are a number of self-guided ways to hone financial analytic skills – including Excel tutorials, YouTube videos, and professional development courses, the costs of which can usually be reimbursed.
The Sourcing Process, which Ardent traditionally calls “strategic sourcing”, is the process of identifying, evaluating, negotiating, and implementing the optimal mix of goods and services that best support the enterprise’s objectives. Sourcing is generally viewed as the strategic part of procurement since it’s the primary mechanism used by procurement departments to deliver savings. The ability to assess, identify, prioritize, and then execute the right opportunities is equally important to you and your procurement team. Fortunately, CPOs rated their teams as better than average when it comes to the sourcing process – one of the highest ranking competencies in our matrix. Remember: sourcing is a blend of “art” and “science”, so mastering it comes from the ability to drive a crisp process and inject it with nuance. There are numerous courses and dozens of books and online resources for you to research and study the process, but there is no substitute for sourcing experience.
Supply Market Knowledge concerns a purchasing or sourcing team’s category management, and having a holistic view of commodity prices, supplier financial standing, and supply/supplier risk. It allows you to mitigate legal, reputational, and supply risk, and to ensure that your company is getting the best possible price for the commodity or service out there. Being a “true expert” on specific supply markets (of specific categories) can advance your career and keep you relevant. And if the expertise is relatively scarce, it can enable you to charge a premium. Unfortunately, CPOs rated their teams as only slightly better than average when it comes to supplier market knowledge. Fortunately, though, the wide availability of information available on the commercial internet has made it easy for procurement professionals to develop a basic level of supply market knowledge, much less ensure that suppliers aren’t in the headlines for any dubious, unethical, or illegal activity.
Category Management is a business process whereby someone or some team in procurement manages an entire category of large, strategic spend that requires dedicated time and a level of expertise or specialization. Category management ensures that the proper sourcing strategies are used to identify the suppliers that offer the highest value in each case. Taking on increasingly larger and more complex spend categories, managing effective supplier relationships, and ensuring high supplier quality and value deepens your value to your team and broadens your expertise across the procurement spectrum, which you should leverage into greater opportunity. But according to CPOs, many procurement teams are just average when it comes to category management. Since no sourcing team can have expertise in every category of enterprise spend, they should increasingly seek out their business counterparts to help them understand the key aspects of certain categories and develop category strategies.
Cash Management gives companies an accurate picture of their short-term liabilities, get reimbursed by their clients in a timely manner, and track who pays early. Beyond payment term policies and negotiation, procurement has many other tools in its cash management drawer, including demand management, compliance and post-payment audits, and the more obvious, savings and departmental efficiency. The reality is that procurement professionals who have broader skill sets will advance farther and faster so understanding how cash flows through a business and what strategies impact it is a valuable skill. However, CPOs believe their teams have below average cash management skills, but it must become a core competency for all finance and procurement teams. Procurement professionals can work to develop an understanding of the impact of different procurement-driven strategies that have a real cash flow impact, including understanding the impact of these strategies on cash positions, on budgets, and on the general ledger.
Contract Management consists of specific steps that address the development, approval, and execution of contracts, and lays the foundation for successful supplier relationship management. In the source-to-settle cycle, contract management is a key component in ensuring that the benefits (e.g., lower prices) of a sourcing event are actually realized throughout the life of the contract. Mastering each sub-process in the greater contract management cycle, and demonstrating your value to your team or future team will serve you well in your career. But like many other competencies, procurement teams were rated just average by CPOs, leaving lots of room for improvement. Like most things, practice makes better, especially with something as nuanced as contract management. Professional development courses can help you get foundational contract management skills, but nothing beats putting your time in and learning by doing.
Tune in to CPO Rising tomorrow when we’ll provide Part 2 of the summary for “Skills for the Modern Procurement Pro.”
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