Ramblings on Procurement and the Changing Organization

In David’s and Michael’s recent series, I found some great material on what innovation is really about. And in the posts this weekend that they asked me to comment on about the changing organization, I’ve got some specific observations which hopefully should prove useful. As some background, I’ve never fancied myself an “organization man”. The button down shirt, boring tie, and ill-fitting IBM-style suit thing has never quite fit my style. And even as a first year consultant out of grad-school, I probably mouthed off a bit too much for my more conservative colleagues. But from years of advising organizations large and small, I’ve observed quite a bit about the willingness of some organizations to embrace change versus those that just pay it lip service. And when it comes to procurement teams, I still see far too much of the latter.

In his post, Michael discusses the new type of “networked person”. In his words, this is “a new species that can be observed in airport lounges, fast inner-city trains, and wi-fi Starbucks.” Michael continues: “Whereas organisation man was cautious about networking and sharing his knowledge, which was his power, networked person feeds off of information exchange and constant communication.”

I feel strongly that procurement organizations need to seek out this new type of networked individual, and should look to this work style as a metaphor for how the broader organization could function. In a fairly recent post on Spend Matters, I wrote about how this might look at the most advanced level as companies “enable the creation of virtual shared services teams between organizations based on processes, skills and availability. A castings category manager from a non-competitive automotive company could identify and work with her counterpart from an industrial manufacturer to share or barter processes, information, and even available capacity and on-the-ground global resources through an On-Demand application or hub. Consider this an On-Demand “skills punch-out” and shared services business process network if you will, made possible by entirely by On-Demand capabilities.” Granted, this is probably further out than I’d like to think. But it’s this typed of networked management approach which will enable procurement organizations to take their capabilities to an entirely new level of performance.

On a human capital front, I’ve always been fascinated by organizational models that offer significant rewards based on results. Granted, savings is only one measurement of Spend Management success, but creating an incentive structure that provides near unlimited upside with a lower base — like a sales compensation model — to operations and supply chain professionals might attract a new level of talent to some companies.

Would I ever take a job in procurement after my experience at FreeMarkets? I might if the structure were similar to the above concept. For example, if someone offered me a base salary of next to nothing, but an incentive plan to get me into the stratosphere based on savings and other results (essentially the other side of a sales person on commission), I’d be tempted to say the least. It’s this type of incentive structure and upside which has the potential to attract the best and brightest away from finance, sales and other functions inside companies (not to mention the banking and consulting worlds) into procurement and supply chain roles.

Now, if you’ll excuse me, I’m going to spend the rest of the day looking to make a few bucks through creative crowdsourcing.

2 Responses to Ramblings on Procurement and the Changing Organization

  1. Thank you, Jason, as always for you efforts here on E-Sourcing Forum.

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