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Published 20 June 2012 21:58, Updated 20 June 2012 22:03
Looking up: Procurement manager Sharyn Scriven wants to sit on a company board
What do Apple chief executive Tim Cook, Rio Tinto director Sam Walsh and former Boral chief executive Mark Selway have in common? They all share backgrounds in procurement.
Once a vague term reserved for the back offices, procurement has been propelled into the spotlight as tough economic conditions have forced companies to better manage risks.
It is no coincidence that following the global financial crisis, 70 per cent of Forbes’ top-rated companies had a chief procurement officer in their executive teams. As practitioners of what is dubbed the fastest-growing profession in Australia, it is not unusual for CPOs to control budgets of between $100 million and $5 billion.
Group manager procurement and supply at Queensland energy supplier ENERGEX, Sharyn Scriven, says CPOs – who manage everything from buying and supply management to compliance, third-party contracts and sustainability – are being recognised for a rare depth of knowledge about how companies work.
Scriven’s team has saved ENERGEX about $45 million (50 per cent) by changing its underground cable specifications over the five years she has held the position. Last financial year alone, her team – which manages about 450 supplier relationships and contracts worth about $5 billion – saved $18 million by consolidating and altering supply contracts.
“Procurement is one of Australia’s fastest-growing professions and has undergone a massive transformation from driving down costs to a whole of business approach,” says Scriven, who has aspirations of sitting on a company board one day.
“We’re responsible for buying everything from pencils to trucks … Often we are the face of the company with suppliers.”
For Scriven, the idea to change the specifications for ENERGEX’s underground cables came during a trip to Europe, the US and Canada, when she witnessed foreign power services companies spending about half what her organisation did on its underground cable specification.
“I brought back my ideas to our technical specialists and I was met with a lot of push-back,” she says. “I had no technical expertise and I was challenged a lot.”
It took about two years and many hours of consultation between ENERGEX engineers and suppliers to convince the engineers that the new cable specifications would work.
“If you are going to rattle a lot of cages [in procurement], you need to be sure you have the support of senior management,” Scriven says.
The global financial crisis forced companies to focus on value, rather than cost. While there are often initial expenses and time associated with creating value, management is now understanding the long-term approach, Scriven says.
“CPOs will [have] a pathway to company boards … They have varying skill sets, from law and compliance to supply chain and people management,” she says.
“Some companies are realising this already and there is a lot of money being thrown around in procurement.”
While this has generally been an area people have just fallen into, organisations such as the Chartered Institute of Purchasing and Supply (CIPS) Australasia are working with universities to create programs that entice new graduates into the sector.
The managing director of CIPS Australasia, Jonathan Dutton , also believes that procurement is the fastest- growing profession in Australia. Like Scriven, he says companies are becoming more aware of the role it plays in managing risk and cutting costs.
“It’s one of the few professions where people really work from end to end across the whole business,” Dutton says. “It is where the big money is being spent and there is an opportunity to make a big difference.”
The founding chairman of procurement consultancy The Faculty, Tania Seary, says CPOs are becoming recognised as strategic risk advisers, rather than just cost cutters.
She says it is also an area where women are building careers and focusing on gaining skills to take to senior executive roles.
“More and more women are finding that a career in procurement can lead to big things,” Seary says. “You’re looking at finance and business operations … but also in a really collaborative way. You need to be absolutely transparent and accountable in all decisions you make … It is really the heartbeat of what an organisation is.
Like Scriven, Seary says tough economic times have “shone a spotlight” on the role of procurement.
“If you have a spotlight on, you better know how to dance,” she says. “Luckily, many of Australia’s top CPOs did.
“We have all seen what can happen when a third-party supplier relationship goes bad – the impact that it can have. These things can bring down a multimillion-dollar brand.”
While the demand for chief procurement officers is rising, organisations such as CIPS, which has about 70,000 members internationally and 5000 in Australia, are working on developing training programs and building relationships with universities to encourage greater professionalism.
In Australia, 12 universities offer degrees in procurement and about 3500 students are studying for degrees in the field.
“There is a skills shortage in procurement,” CIPS’s Dutton says. “The combined spending on procurement in Australia is estimated at about 60 per cent of gross domestic product, or $800 billion. It is just huge.”