Thanks to Mike McCaig for sharing his perspective on the current procurement landscape. Mike is the Chief Procurement Officer at ATI (Allegheny Technologies Incorporated) and a former Director of Supply Chain Management for Dresser-Rand where he oversaw operational procurement for North America. We appreciate the exchange with Mike and believe that anyone in the procurement field can benefit from his insights.
1 – What has surprised you in procurement recently?
Over the past 40 years, whether dealing with commercial or supply contracts, long term frame agreements with long standing partners were generally honored. Over the past 2 years I have seen a significant deterioration as suppliers are leveraging what they are referring to as either “unprecedented inflationary” costs or “operational challenges”.
2 – What is the most overlooked opportunity you see in the current procurement landscape?
Our company was missing huge opportunities in leveraging spend across the company. For the most part that is now fixed. We can do better but much was accomplished. I felt we were likely the exception than the rule. Recent data presented at a Procurement Conference this year was somewhat surprising to me. Many major companies surveyed in the data presented showed poor performances on leveraging spend and reducing maverick spend. This dovetails into my next answer. Albeit there are other reasons, but CM is not done that well in many companies.
3 – We have seen a proliferation of procurement software solutions addressing a broad range of processes. What is one thing you would like to see change in the procurement solution space?
Additional software capabilities in the Category Management space. I am in discussions on this topic with some companies.
4 – What is the greatest challenge that you are experiencing with internal stakeholder relationships?
The one constant through the years is determining between a Decentralized, Centralized or Center-Led organization model. These debates often involve a business case to determine if a shared services approach can leverage resources, deliver overhead savings, and improve performance. Procurement often is included in shared services models, so we are no stranger to this exercise. If these debates evolve from “what is best for the business” and into a “turf battle” then internal relationships can break down rapidly as everyone heads for their own corner.
5 – What is the number one piece of advice you would give procurement executives today?
The message have been being consistently delivered to our Company, as well as the CPO’s I interact with, is to not get complacent in believing the Supply Issues are behind us. In fact, I feel there are still extremely fragile components within the Global Supply Chain. We are experiencing many critical supply issues. Some industries may vary; however, as companies drive down inventories to manage cash while still dealing with underperforming suppliers or intermodal networks the margin for error and likelihood of disruptions are quite high. I continue to emphasize to them that Risk Management is critical to triage and then have action plans to create alternatives/contingencies for the most critical needs of the business.