There has been much discussion recently about the challenges of operating in what some have called a ‘VUCA’ world. VUCA is the acronym for Volatile, Uncertain, Complex and Ambiguous – the four elements that have become the hallmarks of today’s business environment.
- Volatility implies frequent and unexpected changes in contrast to the relative stability that characterised previous decades.
- Uncertainty means that future states are difficult to predict making traditional forecast-based decision making less viable.
- Complexity has grown dramatically in many businesses as a result of extended global supply chains, product proliferation and market and customer diversity.
- Ambiguity is created when poor visibility across the supply chain makes it difficult to read the signals from both the demand side and the supply side and is compounded by the lack of interpretation skills that can provide insight and understanding.
These conditions are distinctly different from those that provided the backdrop to business in the past. As a result it has become apparent that the management skills and mind sets needed to cope with this new world are quite different from those that sufficed in the past. Nowhere is this truer than in procurement. Amongst the skill sets and mind sets required to operate successfully as a procurement professional in this VUCA world I would suggest the following 3 points are priorities:
Being able to respond to events as they happen through rapid decision-making using streamlined processes is clearly essential. Of equal importance is the ability to recognise the need for change and to have the appropriate change management skills to make it happen.
- A willingness to work in closer partnership with key suppliers
As organisations become more dependent on critical vendors a mentality of managing the supply base as if it were part of an ‘extended enterprise’ should be adopted. The aim should be to create a seamless and boundary-less supply chain, meaning that relationship management skills are even more vital than ever.
- A recognition of the role of analytics in a data-driven supply chain
One way to make sense of what is happening in a VUCA world is to be able to convert data into information through the use of advanced analytical tools. Increasingly, procurement management must be able to exploit the potential of ‘big data’, possibly using Artificial Intelligence (AI) to gain insights and to enhance decision-making.
What sort of person is best able to take on board these critical skills and capabilities? It has been suggested that in the past procurement specialists have tended to be more ‘left brain’ rather than ‘right brain’ oriented. The idea is that the brain has two halves: left and right. The left side of the brain enables logical analysis and is characterised by a more formulaic approach to decision making. On the other hand the right side of the brain is concerned with thinking ‘outside the box’, seeing the whole and not just the parts and is about empathy and understanding. Obviously left brain skills will always be needed to ensure an efficient foundation for procurement operations but increasingly a greater emphasis on right brain skills is becoming essential to cope with the VUCA world.
The challenge to organisations is to recognise the need for changed skill sets and mind sets and to make the necessary investment in training and development to make it happen.
Our work in this area is critical to professionalising the supply chain profession and a key area explored within the Leading Procurement Strategy Programme and Supply Chain Management Programme to enable effective skills for next generation professionals.
Blog produced by: Professor Martin Christopher, Emeritus Professor for Supply Chain Management and Logistics, Cranfield School of Management for this blog content. This content has also appeared in the ‘Marine Trader’ Magazine.
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