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EXTINCTION OR OPPORTUNITY: WHAT IS PROCUREMENT’S DESTINY?

By Philip IdesonNovember 10, 2024No Comments

“No matter how strong or how solid your foundations might be, the environment in
which we operate is changing at such a pace that if we do not evolve with it, we
will become obsolete.” – Sebastien Bals, EVP, Chief Procurement Officer at Merck
Group

Thinking about big-picture, existential questions can be uncomfortable. It can
also seem somewhat trivial or even frivolous when companies are faced with so
many real-world, immediate challenges. 

It can be hard to think about the future of procurement in 10 or 20 years when
you’re putting out fires today.

That said, stepping back every once and a while to gut check where we are headed
and whether or not the actions we are taking today are going to get us there is
a necessary strategic exercise. I recently had the opportunity to flex my
“existential” muscle in a podcast episode with Sebastien Bals, EVP and Chief
Procurement Officer at Merck Group, at DPW in Amsterdam. 

As an experienced procurement leader, Sebastien shared his views on the future
of procurement and how emerging technologies like AI have placed procurement
(and other functions, I might add) at a crossroads where we can either leverage
technology as an opportunity to adapt and become stronger or, as Sebastien put
it, join the “graveyard of dinosaurs.”




Here, in Sebastien’s own words, are some highlights from our discussion: 

Procurement’s Confidence Check

“Ultimately it’s very simple. As long as the company is willing to give me a
budget to have a procurement department, it means that they see the value of it.
So there’s no need for us to continuously prove that. And I think once we get
over that hurdle, once we get over that step, we start flying without a net. I
think right now we are flying where we’re moving, but something is holding us
back. And that’s holding us back from achieving greatness.”

Keeping Up the Pandemic Momentum

“Over the last couple of years, if you look at the impact and the value we have
been creating and how procurement departments across many organizations pulled
them through a pandemic, I think nobody will disagree that we have been there
for them. So, we’ve all gotten that ‘seat at the table.’ The question is, will
we keep that seat at the table? How do we now take the center stage we have been
given and shine in our performance?”

Let Go of the Past to Realize the Future

“We still often see ourselves as a support function, and I think we need to
elevate ourselves. If you talk to people in operations, for example, they will
argue that we are an integral part of the entire value chain of the
organization. We create so much value through our suppliers. There’s really
nothing small in what we do. The third parties, our suppliers, are the backbone
and foundation of most organizations, and that’s not going to go away.”

Future-Proofing with Relationships

“Being the customer of choice starts with having strong relationships. When
you’re in trouble, you want somebody to support you in that relationship. You
need that foundation. So, I think if anything, procurement is far more evolving
towards relationship managers than anything else.”

Adaptability is the Antidote to Extinction

“I do think procurement is set up for extinction. On the one hand, you can see
technology as a threat or, on the other, as an opportunity.

If we choose to build on our foundations from the past and believe that they
will make us successful in the future, I believe that the path to extinction is
set. Because, again, if we do not buy the solutions from these companies, they
will stop coming to us, trying to sell it, but go directly to our management or
to our stakeholders.”

It’s OK to Say “I don’t know”

“Nobody has the answer about the future. People sometimes look at you as the
head of the function to say, ‘so what’s the answer? Where do we need to go?’

I don’t know. I’m discovering it together with you. And I think that’s something
also that we need to create as an atmosphere – being honest towards our team
saying, ‘we might go left now, but two months from now, maybe a year from now we
might go back to the right.’

And so we need to be humble about the fact that we don’t have all the answers
but that we are discovering and we are courageous to at least lead the way for
change.”

How Should Procurement Evolve?

“Traditionally, procurement had a category setup. And so we would organize
ourselves around markets and around spend categories, which would make sense
from whatever point of view.

Now, I still believe that that’s important. You need to have a depth of
knowledge or a deep expertise in specific areas. But I also do believe that we
need to start evolving much more towards a business-centric approach.”

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Close Menu
 * Podcasts
   * Podcasts
   * Podcasts Second ColumnPodcasts
     * Art of ProcurementListen to the #1 weekly procurement podcast
   * Podcasts Second ColumnPodcasts
     * Art of SupplyIlluminating the complexity of global supply chains
   * Podcasts Third ColumnPodcasts
     * Procurement 6Reviewing the last week in procurement & supply
   * Podcasts Fourth ColumnPodcasts
     * Introducing…Discover emerging procuretech providers
 * Free Resources & Events
   * Free ResourcesListen, Watch, Read, or Attend!
   * Free Resources Second ColumnPartner with stakeholders
     * PodcastsListen to the #1 weekly procurement podcast
     * BlogsRead up on the latest insights from our team
   * Free Resources Third Column
     * White Papers#TakeAction with our free guidebooks and white papers
     * Digital EventsJoin your peers at an upcoming digital event or webinar
   * Free Resources Fourth Column
     * WebinarsAccess our extensive library of webinars and videos
     * SurveysBenchmark your company performance
 * Insights by Topic
   * Insights by TopicA broad range of content and expertise
   * Insights Second Column
     * Business AlignmentPartner with stakeholders
     * Career DevelopmentElevate your impact
     * Category ManagementBuild category strategies
     * Data & AnalyticsMake informed decisions
     * DigitizationBecome tech-enabled
   * Insights Third Column
     * ESGBe socially accountable
     * Expense ManagementSecure savings that stick
     * LeadershipProactive procurement
     * Procurement TransformationDeliver change with confidence
     * Risk ManagementProtect your supply chain
   * Insights Fourth Column
     * Sourcing & ContractingDeliver business outcomes
     * Supplier ManagementFacilitate supplier innovation
     * Talent ManagementBuild high performing teams
     * TrendsLook to the future
 * About Us
   * About UsLearn more and then reach out if we can help
   * About Us
     * Meet the TeamLearn more about our team and values
     * Our PhilosophyProcurement, Inc. is our approach to aligning procurement
       performance with corporate objectives
   * Work with Us
     * SpendProsRapidly elevate the impact of your team with on-demand access to
       procurement experts
     * Transformation ConsultingBuild a roadmap that elevates the impact of your
       procurement team.
     * Brand Partnerships
   * Get in Touch
     * Contact Us
     * Request our Brand Partnership Guide
     * Join our Expert Network (SpendPros)
 * SUBSCRIBE