Entrepreneurial mind-set for procurement professionals

“Financials come as a result. So, like what’s the point of a company at all? Why even have companies? It’s like, a company is assembly of people gathered to create a product or service and deliver that product or service. As some time, people lost sight of that.

A company has no value in and of itself. It only has value to the degree that it is an effective allocator of resources to create products and services that are of greater value than the cost of inputs. This thing we call profit should just mean over time that the value of the outputs is worth more than the inputs.” - Elon Musk CEO Tesla Motors

Some of the behavioral skills of procurement professions are interpersonal communication, being creative, risk-taking ability and being business acumen or entrepreneur.

Over the years, back in mid of 1980’s, procurement transformations triggered. General Motors’ global sourcing initiative was proved instrumental to develop maturity and competency around procurement function.

Since then, procurement function evolved from focusing on the realization that cost savings have become the key driver of continuous business growth.

After investing efforts in procurement transformation for two decades, very few opportunities are left to continue work on sourcing, category management and spend analysis. Expectation towards measuring procurement value addition as the business and supplier/service provider performance grows.

Procurement transformation has moved very fast to the next level in which procurement function is expected to deliver greater results to support financial indicators of any business. In addition to subjective knowledge, procurement professionals are also expected to be good communicator, clever enough to understand business circumstance, risk takers, great collaborator, market generator, innovator and moreover are probed to establish great network.

As we are experiencing that procurement function is going on under tremendous pressure in terms of market dynamics, cost and value proposition, highly demanding internal and external customers, competitions etc., it has also become important that each function should gain the basic understanding of cross-functional deliverables to respond and collaborate in a healthier way.

Through learning from experience, you feel more responsible by treating your procurement business with the mind-set of business owners. Following characters are the key instrument to push your mind to think as entrepreneur. Undoubtedly, industry is looking forward in having very strong business-minded people.

It has been observed that entrepreneurial employees are highly committed and passionate toward what they do. They are simply smart, innovative and result hunters. As a quick reference, some of the characters are listed as follows:

a) They process energy.

b) They can deal with risks.

c) They support risky decisions.

d) They are creators and it is difficult to fit them into any typical frame.

e) They don’t wait around talking about it instead move on and execute.

f) They don’t fit into micromanagement.

g) They are completely result oriented.

h) They develop multitasking ability.

In the industry, best practices are implemented to be lean as much as possible. For instance, Value addition and simplification target both upstream and downstream activity. Manufacturing quality verification is required to design more robust process. Mistake proofing is required to control the quality of the service/product. Planning before execution/production satisfies the demands of internal and external customers. Inventory control helps to evade dead stock which carries financial burden. First-time right improves efficiency of the process and avoids rework, which is known as nonvalue-added activity. Likewise, every function in an organization has their own objective to deliver.

Business acumen:

It’s the ability to make comprehensive business decisions by combining several factors to arrive at the best outcome for a given situation. Developing procurement professional’s competency in business acumen is not only helpful for the leadership positions but also for all levels.

It includes a thorough understanding of all driving factors supporting profitability, cash flow, supplier market, business segments and an overall understanding of the business context.

Examples of business acumen skills include ability to focus, problem-solving skills, daily learning, active listening to customers and customer’s value focused, business development, insights into the local market, strategic thinking and mind-set, cash flow and P&L focused.

From the given table, you can understand the levels and requirement criteria that can be associated to the expectations from procurement professionals to develop business acumen skills. Self-assessment helps you to understand your level and always strikes you to work continuously hard to progress to the next level.