Procurement recognizes many gaps in corporate intelligence (CI). It sees the need to understand market dynamics, politics, social responsibility, risk, natural disasters, new technologies and cultural trends, inter alia, when entering multi-year contracts or developing long-term partnerships.
CI should not be confused with data. Prices, profitability, turnover, market shares, specifications, events timing and production capacities are fixed data points. CI is understanding the interactions of systems and system components.
This was once a valued capability in corporations. They invested heavily in departments with names like Corporate Planning, Operations Research, Business Strategy and Corporate Development. These came up with ideas, challenged upwards and rethought processes. But their glory days faded and most had gone by 2000, marked by writers like Mintzberg (The Rise and Fall of Strategic Planning), Pascale (Managing on the Edge) and Hamel & Prahalad (Competing for the Future). In the stable world that prevailed in the late 20th century, tomorrow looked much like yesterday, dedicated intelligence resource with no obvious deliverables was expensive to maintain; and external strategy consultants seemed to remove the need for them.
When corporations abandon in-house strategy, functions like Procurement take over selected elements of CI. Procurement’s attempts to acquire and use CI capability are however rarely appreciated by functions who have traditional views on the demarcation of Procurement’s role. Even when a working relationship is developed, functional CI insights are fragmented. They are always incomplete and there is no-one to collate it, build a coherent picture and report implications to leadership.
Procurement could nevertheless be an important step on a leadership ladder that included a dedicated CI function. It occupies a unique, liminal role on the transactional boundary between the inside and outside of a corporation. Looking up and down supply chains, it gains unrivaled exposure to technical, commercial, political and environmental systems.
It is not however credible for Procurement to graduate from its current operational role into a higher level CI and strategy role. If a corporation decides that investment in CI is important it is hopeless to base it on siloed functions and naive to believe that any function, even Procurement, could contribute to the development of corporate strategy. Current perceptions of its role are too ingrained. With reason – the skills-base for transacting requisitions, negotiations, contracts and purchase orders is very different from those required to understand systems interactions in CI. There is however, no doubt that talented individuals who get exposure to Procurement could be in a perfect learning environment to acquire these essential thinking skills.