I was at the local purchasing association meeting last night and was surprised that I was in a quite a number of conversations where the word “retirement” came up.
Don’t miss updates on Procurement & Supply Chain, Subscribe here!
Now, these weren’t 70-somethings. These were sharp-minded 50-somethings that obviously did a good job of financial planning.
Some of their companies have locked on to this trend and have brought in young blood. Others…well, not so much.
So if you’re a purchasing department head and you have a team comprised of a lot of 50-somethings, you better have a plan in case they retire. How is the work going to be done?
- Will you simply downsize and allow others on the team absorb the work?
- Is there work you can automate?
- Will you hire replacements?
- Will you outsource the work?
- Will you utilize some combination of the foregoing?
The important thing is that you’re thinking about this situation now. There are a lot of consequences for waiting such as not having incumbents that can train your new hires, having all of the best talent snapped up before you get around to hiring, and dealing with swamped BPO’s.
Comments
I think the first question an organization should answer is:
* Can I automate some of the work?
Let’s face it, even proactive hiring years in advance of when you expect to fill a position isn’t necessarily going to solve your problem. There’s a good chance that the “purchasing” marketplace is about to experience a shortage that’s going to make the IT talent shortage during the late 90’s boom look pale in comparison! This means that, not only are all your boomers going to be retiring in the near future, but that all of the fresh young talented candidates that you hire today are going to be priority candidates for the recruiters of tomorrow. And when one of them brings your recent hire a higher paying job that is closer to where they (want to) live at a company that they believe better embolizes their preferred way of life, what do you honestly think will happen?
However, the productivity gains you’ll get by putting in good automation and decision support technology will never go away.
Thus, I would recommend that the first thing you do is a process, performance, and technology audit to understand what you can do to increase your productivity and efficiency and what minimal staffing levels you’re going to need to insure that at least a minimal amount of spend can be properly strategically sourced each and every year.
Remember, the great thing about technology-based process and productivity improvements in purchasing is that if you find out that you have more than minimal staffing levels, you can then put more spend under strategic management – and this is when the real savings materialize.
Let’s face it, by the time you factor in up-front software costs, installation costs, maintenance costs, training costs, exception handling costs, etc. etc. etc., no one’s really saved anything (significant) from automation – because these costs usually dwarf the savings from the (minimal) headcount reductions that early e-Procurement systems promised! However, having the manpower to go from strategically sourcing and managing 15% of your spend to 50% of your spend can be organization changing! If you saved a mere 4% on the additional 35% of spend you managed, meaning an overall savings of 1.4%, then, in an average organization, the impact on the bottom line is actually somewhere between 7% and 14%+, since it usually takes $5 to $10+ of sales to have the same bottom line impact as $1 of savings! (Depending, of course, on the average margins of your organization.)
Good points, Michael.
Because you were too modest to give yourself a plug, allow me:
http://blog.sourcinginnovation.com/2007/11/25/what-does-the-doctor-do-for-executives.aspx