Alex Pilsl has a passion for innovation that can challenge the status quo. Presently leading the procurement team at TeamViewer and previously Head of Procurement Europe at Accenture where he helped orchestrate a best of bread next gen procurement function. Alex offers his ideas on today’s procurement function.
Alex, what do you love about Procurement?
Simple – you never get bored. Seriously, I’ve been doing this now for a decade, all my professional life and no single day has been the same. There is always a new challenge around the corner, a new opportunity to get excited about, a new connection to make and a new relationship to build. That’s the beauty, procurement is an ecosystem function. It can’t work by itself, it needs to interface with countless partners both inside the organization and on the outside. It needs to connect those partners, play that ecosystem and unlock value while doing so. All those dynamics at play make it the place to be for everyone that gets excited driving change and being at the forefront of new developments.
How did you get into Procurement? Was your perception of procurement different to the reality?
Unlike almost anyone I ever spoke to who works in procurement, it didn’t happen by accident for me. When still at university, I became very interested in what in my perception at the time appeared to be an overlooked function. Mind you, that was in the Bavarian heartland of automotive champions like BMW and one would argue procurement in the automotive industry was certainly more prominent than elsewhere. Still, it didn’t strike me as a function getting the recognition it deserves. Or in other words, it looked like a land of opportunity to do more with it. So, I did my Master’s in procurement and logistics and was fortunate enough to get a foot in the door at Siemens right after. We were re-working their procurement maturity assessment methodology, then published parts of the results and from there I kind of never thought about leaving the function again. It turned out to be exactly what I wanted.
How has procurement and the expectations placed upon it changed over time?
It comes in waves, I suppose. When I started working in strategy consulting and advising clients on how to improve their procurement setup it was all about maximizing savings outcomes. In the decade since, expectations shifted towards digitizing the function and by doing so making it more efficient. Then it was all about driving value beyond savings, becoming a sustainability champion and ecosystem player. Nowadays we are focusing a lot on risk mitigation, resilience, efficiency in the face of AI and yes, savings again. I think that also tells a story about how versatile a function procurement is and how useful it can be to a company regardless of economic circumstances. In procurement we can be flexible enough to adapt to what the business needs – on many different levels.
How do you feel procurement is perceived in general? Why is this?
It’s a difficult question, because I think perception varies depending on who you ask and I am not sure there is such a thing as a “general perception”. But I think in most companies, the procurement function is underutilised. Many companies don’t recognise the value procurement can drive.
What can procurement do better?
I believe we are still not talking the language of the business enough. We keep coming back to our own little terminology that makes us feel important and create this artificial divide between people intelligent enough to understand it (us) and those that require us explaining it to them. That’s silly and totally unnecessary. The procurement process isn’t difficult and by making it appear that way we are just alienating our customers. It’s actually quite simple, but the trick is to do it well and adapt based on the information you get. You’ll only get that information though if you communicate with people. The business, suppliers, stakeholders and not just within your own small team. We need to be more open, better communicators, closer to the business and bring them along on the journey with us. All that starts with speaking the same language.
Procurement wants the proverbial seat at the table. What does it need to do to earn that seat? What can procurement achieve with this seat?
If you are asking for a seat at the table, you should bring something to that table. And it can’t just be anything, you need to bring something nobody else brings and that all parties find relevant. Looking at what’s relevant to the C-suite today, there probably was never a better time for procurement to sit down at that table and talk about aspects of sustainability in the supply chain, risk management within the supply base, cost reduction opportunities in response to a recession and the pivotal role we can play in engaging with a wider ecosystem of partners that every company needs to succeed in this volatile and demanding environment. Once you sit at the table, the assumption is you are much closer to the rest of the business leadership. You have many more direct communication channels. You are involved sooner. You can connect more dots. As a result, you’ll become much more embedded in what the business does and as we all know, that’s when you can deliver the best outcomes.
Procurement is evolving at pace. The pace of change often calls for new skill sets and disciplines within a team. What value can Procurement source from adding non procurement skilled staff to their teams?
A good procurement team can benefit tremendously from having all kinds of backgrounds amongst it. Diversity in experience and skillset lead to better and more creative solutions to problems. After all, that is what people expect from procurement: to solve problems. For example, if you were to be fortunate enough to have someone with a sales background in your procurement team, imagine what that could do? They could apply their skillset to “sell” the procurement service internally to your own business. Promote it, ensure people use it, understand what your market (the business) needs so you can develop new offerings. Or they could use that same skillset to better understand some sales tactics suppliers are trying on you. The opportunities are endless. Now try the same thing imagining you have a tech genius in your procurement team. How you could improve your analytics capability, your process automation quota or ability to connect one system of yours with another gaining entirely new insights. You get the idea. There is a lot.
Do you need to be a qualified procurement practitioner to be a successful member of a procurement team?
No. I mean, it’s probably a good thing to have a few of these people in your team, but not everybody needs to be a qualified or certified expert. I’d much rather have a diverse group of people with different experience but a common willingness to do great work.
The ecosystem of service, solution, and tool providers is rapidly growing. The need to automate processes, ascertain risk, drive sustainability, and work collaboratively with both internal stakeholder and suppliers are just a few of the areas that the ecosystem can assist. For procurement too truly take the next step and move beyond the seat at the table it needs to embrace this community of providers.
What are the benefits of this growing ecosystem? What are the shortcomings? How do you compare and select in an efficient time frame? What do you feel vendors could do better?
A growing and thriving ecosystem accelerates innovation. Every new solution adds a little something, an idea, a way to look at a process, an approach to a problem that others didn’t. Competition for the best new idea or the best product in a given space eventually helps all of us. Now, it also makes it more difficult to find the right partners and to some degree, at some point it becomes a leap of faith. Specifically, when working with younger players, start-ups, companies that are barely a few years old with no proven track record. But if you want to be truly innovative, you have to take some calculated risks. Nothing is wrong with trying things out in a somewhat controlled environment. I advise to have a look at what’s out there, talk to some providers and then create a shortlist, based on their capability to connect to your in-place architecture as well as their cultural fit and overall value proposition. Then let the shortlisted providers demo in front of an internal audience of business stakeholders and then let those stakeholders vote on their favourite. I mean, after all, they’ll have to use it. That way, everyone will stand behind the solution that is going to be picked in the end.
Will there be a need for a Procurement Technology Officer in the future to handle the dynamic and complexities new solutions can offer?
Well, you can call it that. Or you continue to call it Center of Excellence Lead like we did so far. Or you find an entirely new name. Doesn’t matter, but yes, the success of procurement will heavily depend on having the right talent with an understanding of technology that goes beyond that of the average user. We are not talking programmer level understanding here, but more of a translation layer between what procurement needs, which is based on what the business needs and translating that to something technology can do to help us get there. It’s the old Apple approach, you need someone to help hide the complexity of what is actually happening in the background and make it appear simple in the eyes of the user. Make it appear like magic, because the technology works so well. It’ll only succeed in that if you truly understand what it needs to do in the background and you’ll only understand if you have someone who speaks both technology and procurement languages.
Procurement vs Sales.
In general terms it appears that these two functions do not always seem to work hand in hand. Why?
Incentives. If you are setting the wrong incentives, people will do the wrong things. If you sales team is incentivized to sell however many units they can sell regardless of your companies ability to procure what is needed to produce these units you are going to have a bad time. You’ll have to disappoint customers at some point or increase pressure on your suppliers. Or both. Flipside, if your procurement team is only incentivized by savings they will look for the cheapest possible options. They’ll start to cut corners. Compromise on quality for instance. Product quality getting worse won’t help land new sales in the long run. Yet again, you’ve created a mess by setting the wrong incentives.
What is the solution?
Set the right incentives. Maybe think about measuring both on customer retention? Or both simply on company success? Or whatever you can come up with that doesn’t conflict. A team can move mountains.