Here’s the case for hiring people from outside Procurement for highly strategic categories.
In December, we wrote that it’s time for companies to recognize the power of transferable skills in Procurement. We suggested that companies should hire people with exceptional negotiation, presentation, supplier relationship management and bid preparation skills, even if they don’t have deep experience buying in the category they’ll be working in – be it marketing, facilities, IT, travel, or others.
In short: hire people with business acumen and let them learn the category on the fly.
Procurement people are like other Supply Chain Management professionals: they’re in high demand. With historically-low unemployment in North America, companies are in a battle for top talent. This is especially true in Procurement, as companies in more diverse industries seek to centralize indirect spend and transform their purchasing from a transactional, back-office function into a centre of strategic advantage.
Strategic Procurement used to be exclusive to the financial services industry in Canada, but it’s now gaining penetration in industries like retail, manufacturing, management consulting, and other service industries. The number of people who have the skills to do this is limited, but demand for candidates is getting higher. Hence our suggestion that hiring managers overcome this talent challenge by hiring people with exceptional Procurement acumen, no matter their category experience.
Today, we want to offer a corollary to that outside-the-box idea: in quite a few cases, it might be most effective to hire someone who’s a subject matter expert, but doesn’t have Procurement experience. This includes people from the “other side of the fence” – the supplier side – who haven’t worked in Procurement, but understand the services/products being bought and know how suppliers think.
Here’s an example: we worked with a company in Q3 of 2018 who was bringing on a Strategic Sourcing Manager for their marketing spend. They were conducting an agency review – in other words, deciding whether to switch advertising suppliers – and wanted someone who’s done this sort of review in the past. But the person they ended up hiring was someone highly accomplished from the agency side. She didn’t have a lot of actual Procurement experience, but had a deep understanding of the marketing space – as someone who’d been a marketer herself. Months later, the person is thriving in her marketing Procurement role, conducting an agency review and evaluating suppliers. Another, similar example would be a company hiring someone from the travel industry as a strategic sourcing manager in the travel category.
Let it be said, this doesn’t work for certain categories like direct materials for manufacture. But for certain highly strategic categories where talent is hard to find (IT, Marketing, Facilities, for example), it’s a potentially game-changing solution: hire smart, accomplished people from the supplier side and make them into Procurement people.
So what are the benefits of this approach? From our perspective:
- Increased understanding of the supplier marketplace. Who understands the facilities category better than someone who’s worked in a high-level in the facilities industry? These kinds of subject matter experts have the inside track in terms of knowing what suppliers can deliver, as well as which suppliers can deliver.
- Increased supplier collaboration. Procurement has always focused on cost savings. But in 2018, companies get even more value from Procurement’s ability to forge tight relationships with suppliers. It’s an opportunity to lower risk, share technology and innovation, and gain a strategic edge over competitors. People who understand a suppliers’ point of view because they’re been there can be extraordinarily effective at building those bonds.
- Stakeholder engagement. Getting buy-in from various departments in a business is one of the trickiest, yet most important aspects of a centralized Procurement model. A subject matter expert has a deep understanding of the needs of those stakeholders. They’ll be able to “talk the talk.” They’ll have first-hand of experience of where Procurement has fallen short for them in the past when they were a stakeholder, and that kind of empathy can pay huge dividends when trying to get buy-in for Procurement transformations.
Like any outside-the-box model for hiring, there are a few downsides to this approach. For one, your organization will need to spend time getting a subject matter expert up to speed on various Procurement skills. One idea is to invest in APICS, SCMA or other course to help these individuals learn core Procurement skills. It’s an additional bit of investment of time and up-skilling resources, but has huge potential to pay of in terms of results compared to a conventional hire.
We’ve written about how companies should hire people for their superpowers. In Procurement, that superpower might just be deep subject matter expertise rather than experience putting together a Purchase Order or RFX.