Ungated: 2023 SRM Research Report - Extended Enterprise

2023 GLOBAL SRM RESEARCH REPORT

INTERVIEW: MICHELLE BAKER

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“I see a world that will dramatically change and be changed and most organisations are incapable of responding quickly enough, most will move too slowly. “The horizon is short,” she warns. “I give it three years.”

If you don’t have a talent management programme in place already, get one, she advises. “Use it to find out who your talent is - where do they sit on a spectrum of what’s required - have you decided what’s currently important to have on the spectrum today, tomorrow and day after? If not, do it.”

“There may be a lot of snake oil salesmen out there, but you can’t expect a one-man-band or very small firm to follow the same process as the biggest players - they’ve got a great idea, and either you want it or not, so you will have to take some chances.”

Use tools, like those from HR, State of Flux, and the talent industry, and just get started.” Don’t expect to get it right the first time, she warns, and don’t expect to have all the answers, just get the discussions underway and go from there.

“You cannot do it alone, it has to be a collaborative exercise with your suppliers. They are facing the same big questions, so think about how to work with them and find out what they are finding out. Consider how you pool and share information and if they could still be your suppliers tomorrow, and day after tomorrow.”

“ As a supply leader in the extended ecosystem, if you’re not thinking about the supply chain of tomorrow and how you bring AI into the supply base, you probably won’t have a CPO role for long.”

She says one issue is that many of the leaders of today grew up being schooled in ‘having all the answers’, but that’s no longer the case, things are no longer black and white. “The world is now a neural network of interconnected ideas. Most people who run organisations are in their 50s and grew up in the analogue world of the 1980s. They are not equipped to deal with AI. Some hope to just push it under the carpet, others say ‘our kids will teach us’ - but you can’t do that as a senior leader. You can’t just stand in a room with your senior team and say ‘what are we doing about AI / ESG / talent?’ You need to get involved, facilitate discussions and take action.” She recommends leaders assign some of the thinking to working groups of employees who are under 25, and ask them to consider questions that start ‘how might you….’? “Generation Z are digital natives - they’ve never known a world without social media and AI. Not only do functional leaders need to be thinking about the talent and knowledge they can access through their supply base, but also about the function of tomorrow.” The hierarchical pyramid structure will begin to shrink as whole layers will become replaced by automation on both the buyer and supplier side. Some services will become cheaper, too, as machines replace call centres, debt collection, low-level legal searches, parking ticket solutions, and more. “Functional leaders need to think about the total cost of ownership (TCO) and operating model of their supply base, as well as their own organisations,” she says. “Consider how what’s out there changes the world of your suppliers and how that can be verified.

“When it comes to the extended enterprise,” she says, “if you do not understand the impact of AI on your job as a procurement professional, supply chain or vendor manager - be the impact low, medium or high - you are probably at risk of not having a job in a decade’s time”. Take action “There’s still time for leaders to think: Do I have the tools I need to run my function, to develop my talent, and understand my supply base - are they fit-for-purpose in an AI-powered universe? And if you don’t have the imagination to consider this, form a small task force of people in their 20s to imagineer it. “We’ve got to take action and take it now: Collaborate with the supply base, leadership team and talent pool. Today’s generation of leaders, myself included, must lean on the generation that doesn’t question tech because it’s just always been part of their landscape. “Think about your operating model, consider how to create the talent base of tomorrow, and understand that you’re going to have to kiss some frogs before it works for you.” The next seven years will see the losers and winners in AI, she says, the hustlers and snake oil salesmen versus those who are the real deal. “It won’t take the 35 years it took the Internet to become mainstream, so functional leaders need to think about it right now.”

Do your research A lack of tech-literacy means organisations are full of nervous leaders who want to understand how to work with the supply base but lack the expertise or experience to protect themselves from risk.

Talent management One of the main challenges is talent. Too few organisations have people with the right skills and experience in place - and those individuals will be in high demand. “The clever people who understand how to build this tech will be scarce and expensive.” What businesses must do, recommends Baker, is develop their existing talent. “It’s cheaper to develop talent than to buy it. Organisations will be competing with companies with some very deep pockets, so take the opportunity to take some staff up the learning curve.”

She suggests that companies decide what’s material today, predict what will be in a decade, and plot what AI could mean for each of those and their operating model.

“AI will transmogrify every paradigm we’ve lived with.”

“To be able to assess what you are being told by vendors, you need to do your research.” And remember not to treat a start-up or scale-up with the same industrialised mentality that you treat your largest partners.

“I would challenge every leader who hasn’t thought about talent strategy in the context of AI to get their leadership team together and talk about it. Pick a future date, such as 2025, or 2028, and try to reverse engineer what you will need.

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