Procurement Intelligence Unit

The traditional view of procurement staff is one that is founded on its historically transactional role. But as the function moves towards leveraging value from more strategic activities, the demands made of purchasing staff in relation to their knowledge, and their capacity to best manage that knowledge, increases.

Knowledge workers are those employees that do not directly create a physical product but add value by using ideas. For instance, this includes research scientists, whose value of work may only be realised decades after their labour. However, the industrialised nations are moving towards 'knowledge economies' whereby the majority of the workforce operates on a conceptual level.

The PIU is the midst of compiling research into talent management, and many of our early findings indicate that organisations increasingly feel that procurement staff possess a more knowledge-focused role. The types of competencies that companies seek in buyers and category managers are skewed towards developing procurement processes and managing suppliers in increasingly complex relationships.

As procurement functions move away from a transactional focus and towards a more strategic approach, purchasing staff are transforming into knowledge workers. Procurement functions, therefore, will need to expend more resources in ensuring that staff do not solely observe productivity-enhancing activities that were founded in legacy of a transactional past, but that new methods of improving the efficiency of knowledge buyers are also employed.

A recent McKinsey report examines some of the ways that organisations ensure high productivity in their knowledge workforce. Unlike conventional workers, time-and-motions studies are ineffective in providing systems of work that can be applied to thousands of workers. The needs of knowledge workers are idiosyncratic, diverse and almost entirely unpredictable.

Type-based solutions, where prescriptive approaches to a collective problem can be universally and repeatedly applied are insufficient. Instead, organisations must look to token-based approaches. That is, treat individuals as a unique and stand-alone set of problems that require tailored and innovative solutions. But spending significant resources on bespoke performance management and development is costly and may be unnecessary.

To simplify the management of talent, companies need to consider managing the knowledge in the collective community as an indirect way of managing those workers that share and engage with this network. Within purchasing departments, therefore, the collective experience and understanding in commodity lines, categories and specialisms can be channelled and shared throughout the broader community.

The knowledge of buyers, in relation to specific suppliers, or way of managing supplier types, can be utilised for other suppliers to maximise collective procurement strategic efficiency. The engagement of the function with these broader issues, the effectiveness of individual buyers is also enhanced. By appreciating the new knowledge-focused role of procurement workers, companies can increase knowledge worker efficiency. Companies shouldn't manage the individual, but manage the knowledge.