What is VUCA and how will it affect the procurement organisation of tomorrow?

1. What is VUCA and how will it
affect the procurement
organisation of tomorrow?
Presented by
Paul Rogers
Director of Consulting
Date
July 2016

2. WHAT IS VUCA?
VUCA stands for volatility, uncertainty, complexity and ambiguity. Easy!
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3. VUCA
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Predictabilityofactions
How much do we know about the situation?
COMPLEXITY
Multiple key
decision factors
AMBIGUITY
Lack of clarity
about significance
of an event
VOLATILITY
Rate of change
UNCERTAINTY
Unclear about the
present

4. VUCA
Drivers Effects Solution?
Volatility Market changes
Innovation
Risks
Flux and instability
VISION; act and
review impact
Uncertainty Unpredictability
Disruptions
Paralysis
Few right decisions
UNDERSTANDING;
Satisficing choices
Complexity # relationships
Non linear results
Governance and
processes = barrier
CLARITY; flexibility
of response
Ambiguity Non-programmed
decisions
Loss of consensus
Divergent opinions
AGILITY; agnostic
solutions
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5. SO WHAT?
We often plan years in advance, so how will VUCA affect what we do?
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6. Model of Business Excellence
Leadership
Strategic
planning
Process
solutions
Business
results
Measurement, data, information, knowledge & wisdom
Customer
and market
focus
People
Enablers
Results

7. Leadership
From
• Justifying existence
and scale of full time
procurement team
To
• Sourcing procurement
capability internally
and externally
So what?
Commercial processes will involve a smaller number of
full time commercial specialists and a larger number of
part-time participants and externally sourced resources.
The leader will need to be a visionary and an integrator
capable of creating coherency and consistency

8. Planning
From
• Setting 18-24 month
goals
• Translating corporate
goals into functional
plans
To
• Setting 12 month
goals
• Translating customer
goals into project
plans
So what?
Many events will not be ‘forecast-able’. Agility implies
that foresight is combined with contingency plans
developed based upon scenario planning.
The past ≠ the future

9. Customer / market focus
From
• Internal customers
• Event driven market
reviews
To
• External customers
• Continuous market
reviews
So what?
Commercial operators need to be active in both
customer and supply markets to sense what is
happening. The ability to answer the ‘so what’ question
will need both leading indicators and the entrepreneurial
insight to identify market threats and opportunities

10. People
From
• Process champions
• Focus upon ‘what’
and ‘how’
To
• Outcome focus
• Ability to see
opportunities
• Extended ‘teams’
So what?
Easier to ‘bolt on’ commercial smarts to engineers,
project managers and other business operators than to
improve business insight of full time procurement
practitioners.

11. Process solutions
From
• System driven
governance compliance
• Consistency is king
To
• Agility drives flexible
processes
• Customisation of
process (and goals?)
So what?
Processes will become indistinguishable from technology
that hardwires them. Enterprise wide solutions will need to
adapt or be replaced by smaller, simpler solutions that are
fit-for-niche purposes. Transactional processes will be
bought in and non-programmed decisions made in-house

12. Measurement, DIKW
From
• ‘Hard dollar’ savings
• Focus upon hard data,
and historical data
To
• Outputs and customer
retention
• ‘Factoids’ and
satisficing
So what?
Measurement needs to migrate from introspective role
justification to outputs and engagement. Focus upon
information, knowledge and wisdom rather than data
acquisition or analysis.

13. Business results
From
• Our triple bottom line
• This year versus last
year
To
• Performance of our
supply chains
• This quarter and
moving average
So what?
Reputational capital will be valued as a business outcome
for client and customers. Customer retention and revenue
becomes procurement measure as well as margin.

14. FIVE KEY IMPLICATIONS
What does this mean?
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15. Five key take aways
1. The procurement process will involve a portfolio of
providers, internal and external. So what?
2. The traditional procurement role will diminish in
importance replaced by business people with
commercial smarts. So what?
3. ‘Satisficing’ will displace optimising, and fact-based
decision making will be rarer. So what?
4. Enterprise wide systems that impede agility will be
displaced by simpler solutions. So what?
5. The key managerial choice will be what parts of the
procurement process shall we do ourselves and what
parts shall we acquire from third parties?
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16. Want to know more?
Contact us on
info@comprara.com.au
www.comprara.com.au
+61 (0)3 8606 0379