Why a Transformation Purchasing Department?

By Brice Malm, Director of the Purchasing and Supply Chain Practice at Grant Alexander, expert in human capital and purchasing transformation

To anticipate changes and align talent strategy with the organization’s ambitions, it is essential to recruit a high-level executive.
In these times of extreme uncertainty regarding production capacities and rising raw material and transport costs, are production models far from consumption sites now obsolete? In their editorial in the scientific journal Journal of Purchasing and Supply Management, Dirk-Jan F. Kamann and Thomas E. Johnsen¹ question the future of a globalized and free-trade world, which seems to be coming to an end. Accelerated by the Covid crisis, this issue forms part of a broader reflection linking international production outsourcing and corporate responsibility. Among the causes of this paradigm shift is the collapse of Rana Plaza in Bangladesh² on April 24, 2013, which highlighted the damages of globalization and the contradiction of consumers seeking both low prices and responsible consumption.
However, if we widen the scope, we must recognize that our knowledge decreases proportionally with the distance of the supplier in the value chain. Suppliers beyond tier 3 are almost unknown, deep in a black hole. This ignorance is especially harmful as it leads to limited understanding of strategic factors impacting the management of external resources.
On another level, with SaaS and digital models, we are entering the era of servitization and subscription. Entire sectors of industry are rethinking their business models. New roles are emerging, while some tasks disappear in a logic of creative destruction³.
Thus, buyers at the center of the extended enterprise play a crucial role in supporting major ongoing transitions: digital, globalization, and environmental.

A Transformation Purchasing Department: 3 Rules to Follow
First rule: understand the ambition of the Executive Committee. It is about integrating priorities into the heart of the Purchasing project. The CEO of an SBF 120 company told me that, at a strategic level, he wanted the Purchasing function to act as a watchtower for upcoming mergers and acquisitions. Accordingly, the Purchasing executive’s role involved developing partnerships that could potentially become capital investments in the medium term. At the same time, the Purchasing function had to contribute to operational performance and EBITDA improvement.
Second rule: understand the work of functional departments and position yourself as a provider of differentiating solutions.
Third rule: ensure a transformation leadership role capable of engaging teams and creating the added value and spirit of the function.

The Transformation Purchasing Director: A Rare Profile to Support
These executives who make a difference are difficult to attract. They are rarely actively seeking new roles. They may be receptive at certain points in their careers. Hence the need to know them beforehand and maintain a privileged relationship. We work with them as agents. They know us and trust us. They listen to our proposals and the career advice we provide. Our industry expertise allows us to understand their professional project and align it with a company’s mission, and conversely, identify Purchasing projects that will be meaningful for these high-level executives.
To successfully attract the best, here are some rules to follow:
A project and mission that are easy to understand
Clear governance and positioning
A Purchasing and Supply Chain executive vision compatible with the organization’s values
Experience compatible with the Purchasing maturity level and function history
A possible succession plan for the current executive, or pathways to other leadership roles within the organization
If recruitment success depends on respecting these points, it also requires supporting the executive in the first months, notably through coaching, to secure this critical position within the transformation project and to establish the function as a source of value creation for the organization.

Article by Brice Malm, Director of the Purchasing and Supply Chain Practice, for the journal Profession Achats of the National Purchasing Council.
¹ Coping with the future: Picking your battles, 2019 – Dirk-Jan F. Kamann and Thomas E. Johnsen
² Resulting in the death of a thousand underpaid textile workers
³ Joseph Schumpeter, 1942