With a strong focus on Strategy, Governance, & Business Transformation, Nadia Stoykov is a seasoned executive, experienced with global multinational public & private industrial companies and a Board Advisor for procurement technology Start-Ups in the private equity (PE) sector. A Chief Procurement & Supply Chain Officer with a passion for driving transformation, she has headed projects to enable sustainable, profitable growth and cost optimisation in Procurement, Commercial and Supply Chain areas.
Nadia provides her thoughts on the state of procurement and why now is the time to rise to the challenge.
Nadia, what do you love about Procurement?
Procurement & Sourcing is not only a core business activity in every company but is the function who has direct impact on the bottom line, just as Sales has. What I love about Procurement is its ability to influence company’s financial health, growth and brand/image within the external and internal stakeholders and the larger community, of course when done professionally. Alas the opposite is as well true when professionalism and strategic leadership are missing, and the function is ignored as a result.
How did you get into Procurement? Was your perception of procurement different to the reality?
During my career I have worked in, finance, supply chain, commercial/sales, global process engineering, business development and transformation, within major global manufacturers such as the Dow Chemical Co., Valspar Corp, IDEX, Ahlstrom Group, TESCA Group. My passion sits with driving business transformations, and I noted that in general, procurement transformations are needed in many industries so as a result I have devoted the last 10 years of my career to procurement and supply chain transformations. I would agree that my perception of procurement was quite different than reality compared to what I expected. It was more under developed and less professional than I anticipated it to be. So, the opportunity to improve it and give it a proper place in the organisation became a very compelling challenge to work on.
How has procurement and the expectations placed upon it changed over time?
Procurement like any other function is expected to constantly deliver which is not possible without continuous improvement and change. In the companies where true value of procurement is recognised, the expectations are very high, and its strategic importance requires out of the box thinking and creativity as never before.
How do you feel procurement is perceived in general? Why is this?
I would say that procurement has been underestimated as a value generator and considered an extension of a technical/ R&D and transactional activity. Often it has no place of the Executive Committees and is buried under the finance or operations/supply chain functions. Historically only sales was considered a commercial function and as such received full focus and support by top leadership. The perception was/is that sales have the biggest influence on profitability as a main margin generator.
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?
Strong commercial leadership, innovation, and strategic execution, as well as professional and high performing teams can indisputably put procurement in the spot-light and elevate it to the executive level. What can be achieved in that scenario is to open the profitability scissors and ensure price competitiveness and business growth.
The pandemic appears to have raised people’s 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?
In many companies procurement is still not professional enough and works on a local level or in pockets – isolated from the other core functions in the company – especially supply chain. Alas global sourcing and optimised procurement is still a slogan and not a reality. This is due to company P&L structure which gives full autonomy to country/site operations and creates islands of small profitability instead of taking advantage of the synergetic effect of global buy and global supply chain benefits.
Commercial culture as well as full strategy synchronisation between other functions like operations, sales, supply chain, R&D, finance etc., are still a source of opportunities in procurement.
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?
Excellent question, as indeed for years I am arguing that the biggest pitfall today is talent selection and talent development in procurement. We are still hostages to the idea that a person with superb technical skills can be a good buyer and continue to promote engineers to procurement roles. The greatest skills for a procurement manager are not superb technical knowledge/experience with the product you buy (as there are experts in each organisation to help you with that), but the ability to create viable commercial relationships with suppliers, to feel the pulse of the market and competitive environment, to know how to negotiate with your suppliers so you gain the most value for your organisation and maintain supplier commitment at the same time, etc. I am talking about commercial skills and deep understanding of supply chain and financial levers which help you derive tangible value above and beyond price.
Do you need to be a qualified procurement practitioner to be a successful member of a procurement team?
Not necessarily, I have seen how successful sales professionals can be in procurement roles; how supply chain professionals can quickly reach a good level of procurement performance. It is all a question of character, drive, and as broad as possible operational and business experience.
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?
Technology is developing fast and in the procurement space we have many such providers that contact me every week from different parts of the world. While there are many interesting ideas for providing digital solutions in procurement and keeping in mind we come from a relatively low technology base, one needs to be careful and have a rigorous selection of tools based on the overall global process and where it needs optimization. The shortcomings of all those standard solutions are that they resolve generic problems and often our organisations need tailor made solutions. Before making a full audit of Contract-To-Pay process and assessing possible areas for digital optimisation, it is dangerous to go for plug and play solutions. In that respect it would be good to have a dedicated resource to technology. In line with your next question regarding the need for a Procurement Technology Officer – I don’t see the need for it now. Maybe soon it would be useful, but before solving the general deficiencies of soft skills in procurement, digitalisation will not have significant impact on the bottom line. We currently use some simple tools on top of our ERP system to speed up our RFQ process but for me that is not a real technology revolution in procurement.
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?
That is an excellent question, as indeed there is no rational reason why, and in all fairness, there are companies out there where this is not the case. In fact, procurement and sales are the two sides of the same coin. If one knows how to sell, they surely will be great in buying, and vice versa. Both of those functions have direct impact on margin generation/retention, and for both you need very similar skills and competences to be successful. The best scenarios I have seen working well is when both functions source their resources from one another, which not only helps to develop and motivate people, but has a great positive effect on improving results, as diversity of viewpoints in procurement is priceless. Unfortunately many of the companies out there are so stuck on their conservative approach and perception on the skills and competences of procurement people, failing to recognise that only personality and commercial acumen are difficult to acquire, while all the “technical” knowledge is super easy to learn or source from experts. The war on talent, especially in procurement is proving this point repeatedly, and my hope is that soon the perceptions will shift and unblock this self-imposed dogma.