How to really build a compounding career in Procurement?
A piece you will bookmark.
Why this topic?
Over the last decade, we have had thousands of CPSCM™ members asking us for advice on how to decide when to quit their well settled high paying procurement jobs, how to pick new better procurement roles & truly build a compounding career going on the fast CPO track. A lot of them want either an even better job title, salary, work-life balance or just the pure joy of working with smarter, ambitious teams.
In these unusual and disruptive times, the role of procurement professionals is shifting and evolving at a rapid pace. If you want to make it to the top you will not only need agility, adaptability, and resilience, but you’ll also have to think very carefully about the career choices and self-investment you make along the way.
But before we dig deep, what’s a career in procurement?
For starters, you solve a business problem as an engineer, analyst, procurement manager, director, chief procurement or as a founder/CEO and ensure your company receives the best value for their budgets. In a non-political workplace environment, you are rewarded for adding value to the business.
Creating value involves subtleties.
Value creation that solves the most important problems in front of the business is rewarded exponentially higher than all other types of value creation.
Here is an example: Two procurement managers are working for a tech company “ABC Ltd” that is trying to go public. Considering it needs to really nail down profitability – Manager 1 is solving for taking costs out of the supply chain as a whole, she will be rewarded much higher than Manager 2 who is trying to solve for, say just supplier acquisition.
Now, that’s core to why I keep pushing procurement leaders to solve real northstar problems for your companies.
Going inside Fortune 500 companies and working with their procurement departments, it’s taken us a long time to come to a conclusion about what’s holding us (procurement) back. It’s not anything that’s on your radar.
It’s not supply chain, it’s not systems, it’s not supply issues, it’s not talent, and it’s not anything else that’s probably on your top 10 list.
It has really hit us that the biggest problem that is holding procurement departments back is an overwhelming focus on the present.
Without exception - Every single person in procurement, from the CPO on down, is overwhelmingly consumed by issues happening right now.
Pick a day on your calendar coming up with the least amount of meetings. Plan out what you will reasonably accomplish from a strategy perspective on that day. After the day is done, go back and check what you actually spent your time on.
You won’t even hit 25% of the items on your list. And if you actually analyse what you did spend your time on, it will all be unplanned activities. Things that went wrong that need your immediate attention.
These issues come from every direction, putting out fires trumps laying down strategy every single time.
And so the biggest problem we have in this profession is that we are spending our days focusing on SYMPTOMS. We’re the world’s best fire fighters.
It doesn’t matter how much talented you or your workforce is if you are too busy putting out fires instead. The fires trump the work you were hired to do, yet you can’t ignore the fires, otherwise you will get fired! What a vicious cycle.
The Answer - Pareto analysis
Modern-day applications of Pareto analysis are used to determine which issues cause the most problems. You need to do an analysis of what unplanned fires are sucking the most amount of your time every day of the week, then these areas need to be viewed as symptoms, with all the layers of the onion peeled until root cause is understood.
Once root cause is understood, you can start taking measures to prevent these issues from recurring. Otherwise, you are just turning up the car radio so you can’t hear the bad noise the engine is making.
And this should be an ongoing process because, what’s exponentially rewarded changes every single week/month/quarter/year/decade.
Take the pre COVID-19 vs the post COVID-19 world.
Incentives for companies sustainability initiatives are extremely high in 2023 compared to 2019. And this translates into what behaviour is rewarded in most Fortune 500 companies at a given time.
The point being - understand “trending” incentives.
The kind of value creation that’s valued in a company depends also on the macro context and is not first principles. But, only creating value won’t guarantee a growing career. This is for multiple reasons, some of which are out of your control. I will talk about WHY? in the upcoming newsletter. First, I want you to consume the following.
Now, as you can see, for you to get rewarded, you will have to create constant value → impact the business → ensure your outcome is communicated to leadership, in that sequence.
Does the CEO of your company REALLY understand purchasing’s contributions to the bottom line, or does s/he think “if you are saving me this much money, why don’t I have that much left over in my aggregate budget?” This also means if you only deliver the value and do not ensure it’s communicated, you will not reap the rewards, period.
Very few companies in the world have systems built to recognize value creators inside procurement departments as a fail-proof mechanism - this is the core reason why I will just work harder and the org should take care of my reward does not work anymore in most orgs you will work for.
Quick Tip - Before you join a Procurement Department
Seek out progressive organizations
Asking the right kind of questions will quickly expose workplace culture and the organization’s vision for procurement. Here is a great questions to ask before joining a procurement department -
Are they at a stage where they are close (or in the middle of) a digital transformation? How are they thinking about data and what’s their data strategy?
Ask the right questions and you’ll know whether you’re joining a team that’s more progressive and can give you exponential growth.
Take a moment, think about all the procurement professionals you know (including yourself) & what percentage of them are really in this profession after careful career planning and are great at using the right principles for:
Designing for performance results framework
Procurement Contract Law
Design for TCO Framework
Design for TCO implementation
Investigative negotiations and value creation framework
Investigative negotiations and value creation implementation
Bargaining power management.
That number is in lower single-digit percentages, right?
That’s the whitespace to be in.
You can build a compounding career by being in the top 1%
If you are thinking of really building a compounding career, CPSCM™ might be the right community of procurement leaders who can build value and competitive edge. With over 3000 procurement executives nailing their career bets inside the CPSCM™ membership experience, this is your tribe.