Does Procurement Need a Seat at The Top Table?
James Tucker board level, c-suite, suuplychain...
The debate on whether procurement should have a seat at board level has been an active topic of discussion for a while now, as more and more professionals make the transition to senior positions. However, compared to other departments the number is still negligible, and for many in the industry the procurement function is still severely undervalued. While this argument rages on, a less often asked question is whether it even needs a seat at all in order to be able to shape and influence strategy. While it’s clear that CPO responsibilities have changed from the days of simply bringing down bottom line, professionals now have to add value in a number of different ways, but does this necessitate a place for procurement in the C-Suite? For this month’s blog, we will reflect on a piece that argues that it does not and that a seat at top may actually harm efficiency.
Procurement in the C-Suite: A seat at the wrong table?
In a ‘Procurement, seeking respect, may be looking for a seat at the wrong table’ from US publication Supply Chain Dive, Rich Weismann argues that procurement professionals that are so intent on being recognised by senior staff are often seeking ‘a seat at the wrong table.’ Weismann essentially states that the pursuit of acknowledgement from the executive suite and the feeling that you are being personally and professionally disrespected if you’re not working at board level, is a fallacy. He suggests that rather than focussing on the role of procurement in the C-suite, the main way to exert influence is still ‘the old-fashioned way: through performance.’
Weismann’s reasoning for this is that often a relationship with senior management can generally be unhelpful when dealing with suppliers and can actually hinder chances of recognition and respect amongst those at board level. He cites numerous examples where CEOs or MDs fail to treat suppliers with the same level of importance as customers, leading to negative outcomes that would have been avoided by simply leaving procurement to do its job. He says often, during negotiations with critical A-level suppliers, management would create more uneasiness than collaboration, stemming from the fact that they view ‘customers as all-stars, and suppliers as a necessary evil.’
Suggesting the source of this constant need for validation from the C-Suite, Weismann claims that people in procurement have a long held an ‘inferiority complex’, comparing it to a child that is forced to sit away from the adult’s table. He states that there is some truth to this, with his experience that procurement departments are often viewed as internal organisational barriers, isolated as a backend function and hindered by a lack of respect driven by a perceived lack of leadership abilities.
Look for a seat – but at a different table
The solution that Weismann advocates to deal with this is that procurement professionals should stop fixating on their influence and access to board members. Instead, their main focus should be actively pursuing a healthy and productive working relationship with the C-suite based on mutual respect and understanding. Those that recognise this mutual dependence and are sensitive to their needs will be the ones that eventually succeed in getting senior recognition. The fact that procurement professionals pride themselves on actively managing strong, long-term and often complex relationships with suppliers, should mean that doing the same with executives is something that comes naturally. Weismann says that this is more important than a seat at the top table, and that if you ‘have a better relationship with your supplier’s management than your own – you have cause for concern.’ Furthermore, the need for procurement in the C-suite becomes less critical when there are ‘other tables that are more important’, namely tables within your sphere of influence ‘where the actual work is done.’
The debate rages on
Clearly, the debate over procurement in the C-suite isn’t set to end any time soon. As the nature of skills needed to excel in procurement – many will argue that it’s essential that the added value that procurement brings is rewarded with a seat at the top. However, this view is not universally shared, with both this article and recent discussions at our various round tables both going against it. There are even some that believe that there is no role left for procurement anywhere at all! In fact, a recent series of articles on the future of procurement from went as far as to suggest that procurement has ‘languished toward obsolescence and will die without a transformation.’ At 1st Executive, we are true advocates of the procurement profession and are keen to hear your views - so, what do you think?
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Authored by James Tucker – Managing Director, 1st Executive Ltd