how vuca will affect the procurement organisation of tomorrow
TRANSCRIPT
What is VUCA and how will it affect the procurement organisation of tomorrow?
Presented byPaul RogersDirector of Consulting DateJuly 2016
WHAT IS VUCA?
VUCA stands for volatility, uncertainty, complexity and ambiguity. Easy!
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VUCA
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Pred
icta
bilit
y of
acti
ons
How much do we know about the situation?
COMPLEXITY Multiple key
decision factors
AMBIGUITYLack of clarity
about significance of an event
VOLATILITYRate of change
UNCERTAINTYUnclear about the
present
VUCADrivers Effects Solution?
Volatility Market changesInnovation
RisksFlux and instability
VISION; act and review impact
Uncertainty UnpredictabilityDisruptions
ParalysisFew right decisions
UNDERSTANDING;Satisficing choices
Complexity # relationshipsNon linear results
Governance and processes = barrier
CLARITY; flexibility of response
Ambiguity Non-programmed decisions
Loss of consensusDivergent opinions
AGILITY; agnostic solutions
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SO WHAT?We often plan years in advance, so how will VUCA affect what we do?
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Model of Business Excellence
Leadership
Strategic planning
Process solutions
Business results
Measurement, data, information, knowledge & wisdom
Customer and market
focus
People
Enablers
Results
Leadership
From• Justifying existence
and scale of full time procurement team
To• Sourcing procurement
capability internally and externally
So what?Commercial processes will involve a smaller number of full time commercial specialists and a larger number of part-time participants and externally sourced resources.The leader will need to be a visionary and an integrator capable of creating coherency and consistency
PlanningFrom
• Setting 18-24 month goals
• Translating corporate goals into functional plans
To• Setting 12 month
goals• Translating customer
goals into project plans
So what?Many events will not be ‘forecast-able’. Agility implies that foresight is combined with contingency plans developed based upon scenario planning. The past ≠ the future
Customer / market focus
From• Internal customers• Event driven market
reviews
To• External customers• Continuous market
reviews
So what?Commercial operators need to be active in both customer and supply markets to sense what is happening. The ability to answer the ‘so what’ question will need both leading indicators and the entrepreneurial insight to identify market threats and opportunities
People
From• Process champions• Focus upon ‘what’
and ‘how’
To• Outcome focus• Ability to see
opportunities • Extended ‘teams’
So what?Easier to ‘bolt on’ commercial smarts to engineers, project managers and other business operators than to improve business insight of full time procurement practitioners.
Process solutions
From• System driven
governance compliance• Consistency is king
To• Agility drives flexible
processes• Customisation of
process (and goals?)So what?Processes will become indistinguishable from technology that hardwires them. Enterprise wide solutions will need to adapt or be replaced by smaller, simpler solutions that are fit-for-niche purposes. Transactional processes will be bought in and non-programmed decisions made in-house
Measurement, DIKW
From• ‘Hard dollar’ savings• Focus upon hard data,
and historical data
To• Outputs and customer
retention• ‘Factoids’ and
satisficingSo what?Measurement needs to migrate from introspective role justification to outputs and engagement. Focus upon information, knowledge and wisdom rather than data acquisition or analysis.
Business results
From• Our triple bottom line• This year versus last
year
To• Performance of our
supply chains• This quarter and
moving averageSo what?Reputational capital will be valued as a business outcome for client and customers. Customer retention and revenue becomes procurement measure as well as margin.
FIVE KEY IMPLICATIONSWhat does this mean?
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Five key take aways1. The procurement process will involve a portfolio of
providers, internal and external. So what?2. The traditional procurement role will diminish in
importance replaced by business people with commercial smarts. So what?
3. ‘Satisficing’ will displace optimising, and fact-based decision making will be rarer. So what?
4. Enterprise wide systems that impede agility will be displaced by simpler solutions. So what?
5. The key managerial choice will be what parts of the procurement process shall we do ourselves and what parts shall we acquire from third parties?
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