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Wednesday, May 22, 2024

Procurement Report Card

Malcolm Harrison charts the increasing value of procurement in 2019

Malcolm Harrison is Group CEO of The Chartered Institute of Procurement & Supply (CIPS). Before joining CIPS in 2018, he was CEO of the Crown Commercial Service in the Cabinet Office.

In an ever-changing socio-political and economic landscape, businesses find themselves seeking new solutions to unfamiliar problems. The boardroom has to grapple with complex issues and threats to their business such as sustainability, Brexit uncertainty and modern slavery, and much of the pressure to tackle these issues has fallen on the shoulders of procurement and supply chain professionals.
However, these challenges present new opportunities for managers working in the FMCG industry to produce creative responses and ensure brands are able to adapt to this changing world. For instance, just last month Unilever introduced new sleeveless multipacks to make their supply chain more sustainable while Tony’s Chocolonely have created a cloud based ‘Beantracker’ tool to eradicate modern day slavery and child labour in their cocoa supply chain. Brexit also poses a serious challenge for companies who want to retain market share through this period with the potential for considerable delays at the border and a shortage of warehouse space. These greater responsibilities placed on the procurement profession are having other side effects such as creating a war for talent. The latest CIPS/Hays Salary Survey which is conducted every year, showed that 65 percent of procurement managers are expecting to hire in the next 12 months, which is a 5 percent increase on the previous year. This is a further reflection of the growing importance of procurement and supply management and the need for highly trained and skilled procurement professionals in the FMCG industry and beyond.

Wages too are rising as this demand creates greater competition for the most talented individuals. In 2019 the average increase in pay for procurement professionals was 5.3 percent, compared to the national average which only increased by 2.7 percent. With the continued uncertainty of a no-deal Brexit on the horizon, it’s no surprise that companies are willing to offer more to secure the best talent and shop shelves remain stacked. Our survey results also illustrate the narrowing gaps between public, private and not-for-profit sectors in terms of pay scales, which further demonstrates the increasing value that procurement is bringing to the public sector and to charities. At a professional level, both private and public sector salaries have risen by at least 2 percent from 2018, with an average private sector salary at £53.6K and £44.9K for the public sector.
Further to this, I am pleased that the results have shown that the gender pay gap in procurement is narrowing in 2019 across the public and private sectors. A diverse workforce is essential for more creative responses to such pressing issues, and these results show that impressive progress has been made to ensure a level playing field for individuals working in procurement.
These new business drivers highlight even more the importance of having the right people in place. There are key capabilities that leaders in procurement need to develop in their teams and their own careers, and the perceived value of professionalism remains strong. Moreover, the skills our professionals have acquired are becoming more relevant in broader business environments which means we should see more of our Chief Procurement Officers in CEO roles, if they choose.
As leaders we must ensure we create a culture that encourages diversity of all kinds in procurement, to strengthen our recruitment processes, without unconscious bias, to nurture people to be bold enough to shoot for those senior roles that may initially appear out of reach.

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