The Importance of Communication Skills in Procurement

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🎣 The Catch Up

Hi there,

This week something *magical* happened… Something I’m always secretly waiting for…

There was freezing rain overnight on Wednesday. On Thursday, I woke up early to check conditions outside…

Perfect! Our street was frozen over with 0.75 cm (1/4 inch) of smooth, skateable ice.

Yes, you read that right… Skateable

I woke my daughter up, laced up some old hockey skates and glided up and down our street for 20 minutes, pulling her in a sled.

This happens *Maybe* every couple years… MAGICAL!

Staying on the theme of ‘magic’… Tonight’s note is about the skillset that magically makes everything else better: communication. In a technology centric world, communication skills are increasingly important in Procurement and ProcureTech.

Let me make my case!

I’ll define what I mean by Communication skills, why it’s increasingly important and give you 2 tricks to make quick, tangible progress this year.

Have a great week ahead.

Best,

Joël

P.S. In case you missed it, here was my most popular LinkedIn post of the week:
As a Procurement professional, are you dealing with people that can't stand you?

🌙 Sunday Night Note

What Are Communications Skills?

Communication skills, communication skills, communications skills. Everyone says they are important but we never go into the details (a pet peeve of mine)… So what do we mean when we refer to ‘communication skills’?

Communication is a 5-step process between two parties:

• Idea formation. You come up with an idea.

• Encoding. You figure out the best way to convey this idea according to the context (verbally, written, with a chart, etc.)

• Channel selection. You select a communication channel (presentation, written, oral, etc.)

• Decoding. The other party receives your message and attempts to understand.

• Feedback. The second party uses your communication as an input to their idea formation process and the process starts over again.

So, communication skills translate to mastery of the underlying abilities, behaviors and tools that enable high performance in the above process. This means being good at:

• Capturing data, ideas and concepts (input):

  • Active Listening/Reading

    • Focus/Observation/Empathy

    • Reading non-verbal cues/context

    • Asking clarifying questions

    • Restating your understanding of the message(s) received to confirm comprehension

  • Idea capture

    • Memorization

    • Note taking

• Assimilation/Transformation

  • Brainstorming

  • Writing/Outlining/Summarizing

  • Critical Thinking / Elaborating (building upon known concepts)

  • Data visualization (being able to pick the right charts and diagrams to present information)

• Transmission of data, ideas and concepts (output):

  • Writing

  • Presenting/Speaking

    • Non-verbal communication

    • Adapting communication style to your audience

    • Validating comprehension of your outputs

These are all things you can get measurably better at… Contrary to the nebulous term: ‘Communication’.

Why Are Communication Skills Increasingly Important in Procurement?

I’m the Digital Procurement guy, right? Why am I talking to you about communication?

As technology takes an increasingly important role in Procurement operations, most notably Artificial Intelligence, the main skillset that will differentiate you and your team from others is communication.

Why?

1/ Technology is Slowly Becoming a Common Denominator

There’s still a ways to go before you can buy a “Procurement function in a box” when it comes to technology… Today, there’s still a competitive advantage to be gained based on how you select, implement and utilize ProcureTech in your organization vs. an other.

However, what I am seeing come out of the Process Orchestration space has me excited for the future in this regard. I believe there are a finite number of Procurement operations (purchasing) use cases out there. It’s by no means a small number but it is finite. After all, we are all working to the same high level process:

• Analyze Spend (past) and future demand (future) in a given spend category

• Elaborate a value maximization strategy (Category Management)

• Execute on the strategy (Sourcing/Contracting)

• Operationalize the results with processes in your Procurement operations (purchasing) → All the Procure-to-Pay process variations.

• Measure supplier performance and adjust as needed

If the Process Orchestration layer comes out of the box with a critical mass of:

• Executable business processes to support the above

• Standard connectors for the most popular back-end systems that support these processes in our organizations (think: Ariba, Coupa, GEP, Ivalua, Jaggaer, SAP ERP, Oracle ERP, JDE ERP, NetSuite and the popular best-of-breed solutions…)

… well, most organizations will be able to “install” standard Procurement processes and technology with much less difficulty and potential for error/failure than today.

What’s left?

The “People” dimension of our operational triad (People, Process & Technology):

• Communication between managers and employees

• Communication between colleagues

• Communication between buyers and suppliers

• Communication between different business functions

Can you afford to have subpar communication skills if this turns out to be true?

2/ Technology ROI Will Rely on Communication Skills

Generative artificial intelligence (Gen AI) is slowly “eating” the traditional software world (contrary to what was predicted for Blockchain a few years ago 😂).

I’d say 50-70% of the software I use on a daily basis now has varying levels of Gen AI functionalities embedded into them. And that’s within 2 years of Gen AI hitting mainstream… I can only imagine the result in another 5 years.

That being said, what is the common thread through all of these Gen AI functionalities?

The quality of your results is highly dependent on the quality of your prompts (i.e. asking good questions/giving good instructions).

Provided the backend Large Language Model (LLM) is high quality, it is the:

• Quality of your questions (input)

• Interpretation of the answers (critical thinking)

• Transmission of data, ideas and concepts in the form of new questions (output - and loop back around)

… that will determine the quality of your results and, at scale, your organization’s ROI on technology.

I’m already seeing this happen for:

• Customer Service via chat bot. And let’s face it, everyone in your organization becoming a customer… (e.g. how do I buy X? What is our policy on Y? What are the payment terms for X vendor in our back end system?)

• Content Creation (e.g. drafting RFx documents, contracts, emails, etc.)

• Software Development/Configuration (e.g. please configure the solution to do X, Y and Z for me)

The implication?

Procurement Organizations (and organizations at large really) that aren’t investing heavily in:

A) Manager and Employee communication skills

B) Understanding and leveraging Gen AI

…are going to end up ‘behind the 8-ball’ very quickly.

But let’s not wait after your organization, shall we… 😅

Here’s what YOU can do to prepare yourself now!

2 Hacks to Develop Your Communication Skills

Along with continued learning on Gen AI (e.g. by continuing to read Pure Procurement Deep Dives on Gen AI and it’s applications in Procurement 😉), you should also be continuously working on your honing your communication skills.

Here are two great methods I’ve used to level up my communication skills over the years:

1. Take a theater and/or Improv Class

2. Start a regular writing practice

The first one may sound silly but let’s break it down…

Good communication skills come to you when you put the reps in (you don’t build muscle staying on the couch!). Theater and Improv force you to cycle through the 5-step process outlined earlier over and over and over again in a very short period of time.

Theater is the onramp. Improv is the big leagues.

Similarly, starting a regular writing practice (e.g. posting to social media, keeping a blog or even just writing a professional journal), forces you to sit with ideas, figure out what you really believe and then find a way to put it out coherently on paper (output).

However you choose to do it, find activities that force you to cycle through the 5-step process with high volume while developing the skills listed (e.g. Data visualization: how do I turn articles/books I read into single PowerPoint slides?")

Your Procurement productivity/performance will increasingly depend on it!

P.S. Are you having a strong reaction to this week’s newsletter (positive or negative)? Reply to this email or tell me what you think via the poll below!

I love a good (respectful) debate.

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