Thiago Braga is an award-winning global executive with 20 years of Supply Chain & Procurement experience, managing large teams responsible for multi billion $. He has led 4 transformation programs serving 11 organizations in 3 countries (Canada, US, and Brazil) and supported operations globally.
He has recently embarked on the next chapter of his journey with Alberta Health Services and luckily we were able to grab a few moments of his time and pick his Procurement & Supply Chain brain.
Thiago, how has procurement and the expectations placed upon it changed over time?
I would say the Supply Chain profession (and not just Procurement) has evolved significantly in the last few years and continues to do so. At first, you would be expected to “just buy” (Purchasing) and someone else to “just deliver” (Warehousing/Fulfilment). Procurement would be focused on “saving money” while Warehousing would be focused on “delivering it quickly”. The internal structure was quite isolated, linear, and transactional. Those expectations have evolved. The difference now is that the entire chain/function, not each node in isolation, is being held accountable as one. If procurement saved money on the front end but there were logistical issues, delays, damages, shortages, or issues affecting the delivery of the customer promise (the order fulfilment), the SCM function overall didn’t succeed.
Clients currently expect the entire function (Procurement, Inventory, Logistics, Warehousing, etc.) to work in harmony, seamlessly, and fully integrated. Success is measured at a much higher level than just at the individual nodes of the chain. This is easier said than done and that’s why the expectations today are much higher. Properly managing the entire chain is a big challenge. Procurement is now managed at a program level. By program, I mean the entire function in each organization, regardless of what it’s called in your company (Procurement, Supply Chain, etc.).
Today senior leaders and customers don’t want, and really shouldn’t, get sucked into our own internal challenges on why something didn’t happen the way it should have happened. We’re now expected to properly manage the entire chain in times of severe disruption (pandemic, wars, global shortages, etc.) and still succeed. We’re ultimately responding for the complete supply ecosystem. From the supplier, sub-suppliers, external and internal flow of product/service, until consumption.
It’s less about how much was saved in a transaction, and more about how the program succeeded in supporting the corporate promise, the organisational strategic plan, and the final client/consumer expectation. This is a real game changer as the profession evolved to a point where Chief Procurement Officers and Chief Supply Chain Officers are directly influencing strategy at the highest levels in the organisations; not just as executors but partners in building it. It’s an exciting time to be in the profession but make no mistake, the stakes are extremely high as we are entrusted to make the entire ecosystem thrive and generate sustainable value.
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?
My belief is that a seat at the table only happens if there is a true perception by the business that Procurement is bringing real value to the organization. That seat won’t come because we say so nor because of our credentials. It will come organically when we, directly and indirectly, create value, drive strategy, raise the level of performance, and become a partner that can’t be left out when important decisions need to happen at senior leadership tables. To do that we need, as practitioners, to start generating that level of value delivery, customer service, pristine performance, and problem-solving at all levels in the organization. We don’t just fix problems, we anticipate them from even occurring in the first place. We don’t just do what is expected at a micro level, we raise the bar and anticipate trends and help to reposition strategies at macro levels.
Besides doing the work, we enhance and articulate (communicate) our value to the organization. From front-line staff interactions to senior leadership. When results are shown, and when we’re able to connect how our profession supports the corporate promise, we start making a difference and being naturally invited to be partners at the table.
Once there is such recognition, then the sky is the limit on what can be achieved. We can influence growth and sustainability strategies, help in M&A plans, and partner with all areas such as business development and operations. We can influence the entire organisation to be more effective and successful in its purpose and mission. It’s not a cliché to say the competitive advantage in many organizations is their supply chain functions. That realisation occurs when the function itself is raised enough to be perceived and valued as such.
The pandemic appears to have raised peoples awareness of procurement. There is a significant opportunity for procurement to move away from the back-office support function label and move towards the role of commercial facilitator. Does procurement need to rebrand or reinvigorate its processes and culture to make the most of this opportunity?
Rebranding should be part of an intentional effort accompanied by meaningful actions and results, not as a stand-alone to improve procurement’s image, otherwise it won’t succeed. Procurement needs to take action in being more assertive and intentional in co-creating value, strengthening partnerships internally and externally, reducing inefficiencies, and facilitating conversations. As the function evolves internally and gains more and more respect, rebranding makes sense given that it is to reflect the new values and behaviours at display. On a side note, procurement and supply chain professionals can benefit from learning how to communicate our value proposition more clearly (in the business language instead of the procurement language), also leveraging resources from other internal areas (i.e. Communications, Marketing, Public Relations) to further articulate our reason to exist and why the function matters in the organization.
Procurement vs Sales
In general terms it appears that these two functions do not always seem to work hand in hand. Why? What is the solution?
Procurement and Sales are two areas more alike than one might think or would like to acknowledge. They should be the best partners in creating solutions for our organizations. For the two areas to flourish it’s necessary to be more focused on relationship building, long-range plans, a synergy of strategies, and mutual value benefit. It does require both sides to be less transactional and work cooperatively with each other. The two “sides” can and should both “win” in their interactions. In addition, procurement professionals are also salespeople, whether we like it or not.
We need to realise that every single day we’re in the business of influencing stakeholders, selling ideas, proposing change, and convincing others to buy into a particular supplier strategy represented by procurement. Both sides are ambassadors and can share a complimentary end goal. At the end of the day, both functions carry a similar toolbox kit and skillset.