In hindsight new technology often looks like the obvious choice and you may ask yourself why it took us so long to fully embrace it after all.
I do remember being resistant to giving up my BlackBerry thinking I could not survive without a keyboard on a mobile phone. 3 weeks after changing to my first iPhone 5 I never looked back. I always wondered though, why the hype around this new device? Did Apple really invent something so extraordinarily new? I don’t think so. They just combined and made existing technologies much better and more convenient to use. A phone that never crashes – how amazing was that. A camera that actually took great pictures. Software applications (apps) that made your life easier. Easy to use and self-explanatory. A phone that was just the next logical step in the evolution of handheld devices which, in hindsight, makes absolute sense and looks so obvious.
I feel similarly about the ubiquitous topic of the electrification of the car these days. Is it really a breakthrough invention, a totally new technology? Probably not. In a matter of fact, the electric motor has been around for more than 100 years. Nonetheless its recent “rediscovery” has clearly ruffled “the big oil controlled” auto industry initiated by a PayPal billionaire which is amazing in itself and scary at the same time. At a closer look what struck me most is the obvious simplicity of the electric engine. An advantage which seemed to have been brushed aside for quite a while. With its mere 20 moving components compared to 2000 in an average combustion engine, maintenance cost is lower and reliability higher. What happened to basic economic theory that tells us that capitalism is meant to allocate resources in the most efficient way to achieve a certain outcome? Clearly not with combustion engines it seems that struggle to reach a thermal efficiency of 40% in contrast to electric engines which have a rate of efficiency of 85% on average. This all makes you wonder if we were held hostage by an army of engineers for a good 100 years, engulfed in self-admiration and self-satisfaction to have come up with an even more powerful and complex combustion engine year over year without really advancing mankind that much after all.
And with the emergence of Tesla you do not just have an automobile manufacturer that puts an electric engine into a previously petrol or diesel driven car. What Tesla actually does in my mind is to disrupt how we think about mobility. Driving versus being driven is top of mind and a dream that we are not far from putting into reality. This new spirit of self-driving mobility is brought to life with a mere glance at the Tesla Model 3’s dashboard. Simplicity is key, with a car that updates and will drive itself in the future. Even the most recent Mercedes C-class interior looks in comparison like a reminiscence from another era still focusing on the driver with all those confusing buttons and switches.
The curse of savings
As mentioned before, change, technological advances that we experience throughout our lives seem initially daunting but ultimately appear so obvious and straight forward after the fact. It comes at a shock at times, how quickly the previous provider disappears when a new modus operandi finally prevails.
As procurement function we are exactly at this BlackBerry and combustion engine moment where we can see the future of procurement materializing in front of our eyes but instead of embracing change we deliberate endlessly of what to do. Not showing any determination to make the final push forward. We cling onto the known and continue to rely on processes and procedures that we have become so familiar with. We reject to challenge ourselves if these very processes still make any sense to our stakeholders. We shy away from making the leap forward just because we dread losing what has become so dear and close to our hearts. And I am afraid to say for procurement this is predominantly the scorecard mentality and in particular the key metric of delivering “savings”.
We currently run a high risk as procurement function to be forcefully pushed to change, to adapt our ways of working when the support of the current rather singular approach is finally withdrawn – similar to receiving the notification that BlackBerry in no longer updating its devices. Procurement’s BlackBerry moment is overdue and imminent. The continued belief to be solely responsible for cost policing and cost cutting is no longer what is needed within today’s organizations. And we all know it. We all have received that feedback from CFOs, CEOs, CMOs, suppliers and other stakeholders, throughout our careers that we need to focus on company goals rather than ours at times very removed scorecards. How often have we caught ourselves praising procurement of delivering record savings whereas the company is losing market share? How often have we implemented cost reducing initiatives whilst increasing lead times, inventory levels and risk in the supply chain? How often have we claimed savings that did not trickle through the P&L and left the organization in awe?
The future of procurement
The fixation onto savings is that symbolic BlackBerry that procurement needs to rid itself of. Instead we need a Tesla moment in procurement. The moment of not necessarily reinventing the wheel but revisiting it and step changing its application. Simplifying processes and implementing new ways of working. Let’s move from ‘driving’, that we have done very successfully over the past 30 years, to ‘mobility’. In procurement terms this would mean to become simply more customer centric.
What that means is that in future, the customer centric buyer is a consultant, intrapreneur, strategist and project manager. He or she has a clear, strategic view of how internal and external forces need to interact with each other to drive value for both sides and deliver what was promised to the end consumer. He or she navigates the procurement process for the stakeholders assuming commercial ownership over internal and external business relationships. The future buyer is astute in creating ROI models and business recommendations that take their customers with them. The future buyer is empowered and enabled. He or she does not shy away from conflict to highlight and challenge risks in the end to end supply chain and to push innovation into the organization to make the overall company future ready.
Let’s make the future happen today and trigger the Iphonization and Teslarization in procurement. Let’s embrace customer centricity once and for all.
Written by Jens Hentschel, Founder & CEO of THE FIVIS PARTNERSHIP. The Consultancy That Gets You Your Oomph back! www.fivis.io