Last week on the Procurement Rising Podcast (click to listen), I had the pleasure of speaking with Bill Cooper, the recently retired and former Chief Procurement Officer of the entire University of California system. During our discussion, we talked about Bill’s long and illustrious career in procurement, what the function was like when he first started how it has evolved over the years, and the sustainable procurement philosophy.
The Evolution of the Procurement Function
The evolution of the procurement function can be followed by the names. Early on, the procurement function was known as the purchasing department. And that is what it was for…purchasing. And then the function were filled with buyers who were buying items in a more reactive way. The function was stuck in the back office and was very transaction oriented. Smarter organizations began to realize that maybe the function shouldn’t be reactive, and this was seen particularly in manufacturing where you had some visibility into what your needs were going to be. This opened up opportunities for some strategic sourcing. Looking forward the strategy was to create contracts and put the organization in a position to have a continuous source of supply. Bill spoke about how one of the biggest problems for procurement stakeholders is that they think procurement’s true function is reducing costs for the organization. Bill argued that “first and foremost, you want to ensure continuous supply support. If you don’t have it, it doesn’t matter what it would cost.” As strategic sourcing became more important, it also meant that procurement needed to build stronger partnerships with its suppliers. Strong partnerships put procurement in a stronger position for that continuous supply support.
The next wave of change that really altered the trajectory of the function happened once technology become such an important aspect of the business. “Technology changed everything about the function,” Bill said, “it allowed us to reorganize in such a way that we weren’t spending all our time on the individual transactions.” The use of technologies like spend analytics and e-procurement software allowed procurement leaders to better utilize the organizational structure and staff. It also allowed the function to focus on things like category management. Intelligent procurement functions “change how you operate, it changes who you hire, your training, your operation, the organizational structure…everything.”
The New Procurement is Sustainable Procurement
Bill talked about how today’s marketplace has become much more competitive in all aspects. There is much greater competition for the suppliers and the demand that is there to ensure the continuous supply support. It is imperative that procurement create and maintain the contractual partnership and no longer operate on a reactive basis. One philosophy that Bill was very passionate about during our discussion was sustainable procurement. Sustainability focuses on meeting the needs of the present without compromising the ability of future generations to meet those needs. While we all think about sustainability in terms of the environment, it can also be thought of in other areas as well. For Bill there are three pillars of sustainability: environmental, social, and economic. The sustainable procurement view solidifies all three of these pillars and makes them a key part of all purchasing activity. In order to have long-term sustainability, procurement leaders need to constantly be evaluating both the suppliers they are partnering with and what it is they are buying on the basis of socio-economic and environmental aspects. These are considerations that are not just a small part of or a ‘nice to have’, but rather are fully integral in good procurement today. “If there is nothing else, I would urge today’s procurement organizations to base their business decisions on that sustainable procurement philosophy.”
Click here if you want to listen to my full discussion with Bill. The Procurement Rising podcast series is also available on Apple, Spotify, Stitcher, Google, or wherever you get your podcasts. Please consider giving us a follow.
