Wednesday, 15 June 2011

The decline and fall of “Just in Time” JIT The Selling implications. Day Two of the Public Procurement Show 2011 at London’s Excel.

Approaching Hall S6 for the second day of the Public Procurement Show at London's Excel centre visitors were greeted by sign outside the shuttered entrance pleading for SILENCE. Was this a government Health warning to not challenge the Privatisation of Procurement, a gagging injunction place by the legal team of a premier footballer or a sign form a closed public library to be remodelled for another purpose.

Well no. it is exam season and the Halls N7 and N8 were being used by the ACCA for accountancy examinations. Indeed I had noticed that the Boulevard of the Excel was populated by hoards of young folk cramming the last bits of information for their exams. The folks on the ACCA registration desk told me that on some days as many as 4,000 candidates sit for exams.

Day two opened with a practitioner’s view from David Noble Chief executive of the Chartered Institute of Purchasing and supply CIPS.
David’s scene setter was two tables from OECD figures of countries ranked by GDP. The first was for 2010 where the UK was ranked No 5 but our country’ position estimated for 2050 was no.9. Ahead of the UK were China, USA, India, Brazil, Mexico, and Russia….
( David Noble (left) preparing for the start of his presentation )
David went on to outline the new hard globalisation where there is a ‘WAR for TALENT’. By the time today’s graduate’s reach 38 years they will have had 13 jobs. The West is aging and the east has a shortage of skills.
Gone are the days of Purchasing strategy of 3 years. Today it is not uncommon for strategies to be reviewed every 3-6 months.

This has led to dilemma for Leaders:
How should leaders develop their organisations that are in continuous transformation.
How to embrace a change from a vertical hierarchical approach to a virtual one. David suggested Google as an example where the middle management roles have been pretty well exclusively been outsourced.
How to meet the challenge of the involvement of business analysts and stakeholders in the operation including an input to Procurement.
How to satisfy the ‘entitled’ generation Y ‘s expectation of the environment and workplace.

The conventional Supply Chain models of yesterday. Now of increasing importance to standard delivery and cost control Procurement must expand its worldview to include Risk management, Downstream issues, Regionalised approaches and react quicker.
It is forecasted that 65% of R&D will be outsourced and 80 % of engineered services and product design.

The supply chain is being contracted. Labour is a diminishing fraction of cost there is a globalisation levelling of wages.
David mentioned how just in time purchasing ethos has been found wanting when natural disaster such as the Japanese earthquakes at the beginning of the year.
• 90% of specialist resin came from a single source in japan now lost.
• Similarly a specialist metallic car paint factory.
• 70 % of Ipod batteries.
• We are moving back from Just in Time to Just in Case!
Procurement used to concentrate on delivery and cost working for the right time, Place and Quality of products and services.

Now that purchasing is under the spotlight from European Legislation and the points mentioned above the skills sets of the modern Procurement Professional requires them to be capable and skilled with an understanding of the market and category management and particularly post purchasing professionalism. The profession David Noble emphasised, will be needing to attract the best talent for a professional increasingly to be both aware of and contributing to Strategic awareness and represented at the top table.

In his discussion with other CEOs and Professional Institutes he discovered that only accountant institute membership was growing e.g. CIMA and ACCA which did not surprise the audience in Hall S6 when they looked across to the ranks of desks in N7 and N8 across the boulevard working on their examination papers.

(Evidence of David's statement about the growing army of accountants about to qualify!)

David provocatively summed up on areas where Procurement Profession had to improve:
• Procurement are in the firing line and more visible than ever.
• Commissioning is essentially another word for Strategic Procurement – a peculiarly UK take!
• Stakeholder management is a particularly weak area.
• The Victim status of the procurement profession – selling the profession to the country, Government right down to School level.
Opportunities are the development of a ‘Licence to operate’ underpinned by CIPS as the benchmark of global best practice – where CIPS will act as gatekeeper. CIPS biggest growth is outside the UK.
Shortly to be launched is a tie up with Cranfield on a Master programme. The Old days of Purchasing and Supply are being superseded by a Multi discipline profession with skills in Marketing and Finance.

Asking Will Beatie , head of Business Development at CIPS about which courses he would suggest those on the selling side should consider in the CIPS Training Portfolio , Will suggested looking at the suite of Negotiation Courses CIPS run. CIPS run 5 different negotiation courses

Other related links to Selling implications from changes in the Procurement World

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