Which Industry Suits You?
When considering their next roles candidates quite rightly also contemplate changing not just the type of role, but also the industry in which they will be working.
Public Sector
Public sector is the sleeping giant of the procurement & supply chain industry. At present they are seen as lacklustre and uninspiring and a place where procurement practitioners go to put their feet up before retirement. This will change in the next 5 years, with some of the most exciting transformations planned to occur in this sector.
Global consulting firms and modern strategists are targeting public sector to become far more commercial in their approach, less risk adverse and find an overall balance of compliance and commercialism. Long winded processes will be e-commerce lead, current staff across all fields will have to justify their appointments and represent real value to the organization. This leaner, meaner and more commercial approach should enable more revenue from the bottom line to be pumped back into public services, education, infrastructure and utilities.
With the spends approaching billions of dollars, there is no more attractive and challenging environment than the public sector to implement leading edge supply chain and change management processes and techniques across large business units. Bright and innovative candidates currently working in this space will be hot property in 3-5 years time, as they are likely to gain multiple category exposure, covering end-to-end procurement strategy whilst engaging some of the most stubborn stake holders found within any industry.
If you can appreciate the 3-5 year transformation plan and marry your commercial expectations with that of realistic time frames for change, rewards will be met in your next move into the commercial environment.
Manufacturing
Within supply chain and procurement it could be argued that manufacturing offers most job satisfaction as a profession, due to the fact that reducing the bottom line adds tremendous importance to the business. As a rule, manufacturing companies have the broadest range of categories, a lot more emphasis is placed on direct and critical spend. These categories include packaging, ingredients, components, engineering and labour.
It is our prediction that there is a limited future for procurement professionals who are sat within a non-critical procurement role within a manufacturing organisation. Indirect procurement outsourcing will become more and more commonplace as companies realise that leveraging aggregated deals on non-core or more importantly non-competitive product items, offers a real way to reduce their overall cost base and in doing so contribute to increased profits.
Bearing this in mind, direct spend will continue to become more strategic, innovative and increasingly more critical for market positioning and driving business’ forward. As this increases so the procurement professional who specialises in this area will become more highly sought after and as such better remunerated.
The golden industry within manufacturing is FMCG. From a supply chain perspective, it is often noted that if you can co-ordinate and manage a product that has a short shelf life, then you can manage anything an industry outside of this space can throw at you. Leading initiatives such as inventory optimisation, factory gate pricing, distribution optimisation and transport planning are driving the FMCG sector forward and at the moment this trend is being led by the leading consulting firms.
As far as salary, work/life balance and career advancement go, manufacturing is the middle player. Salaries are strong within procurement, although on average 10% lower than service sectors, but it is this sector that tends to spend the least amount of time at work.
Services and Finance
The service industry offers most of the benefits of consulting without the sacrifice of your social life. Services covers a wide range of industries, the most common being Financial (especially in the Sydney market). Financial services offer the greatest rewards in terms of pay at the junior end of the market and plays only second to consulting at the executive end. Hours expected are standard, with many organisations offering perks ranging from zero interest credit cards to on-site gym’s and child care.
If there is a hang up working within the financial services, it is frustration, which can manifest itself in two ways… At the senior end of the spectrum, most service institutions are led out of the UK or USA markets often with a high-level sourcing strategy. This is rolled-out globally with Asia Pac more often than not at the tail-end of the cycle. It is also often cited that little consideration seems to be given to differences in culture, attitude and logistics outside of these Head Office lead initiatives. The process and financial improvements are credited to the centralising global negotiator but the day-to-day process frustrations are experienced by the outlying global regions.
If you are a keen leader and high-end thinker of strategic implementation and change strategies, you may soon realise that you do not control your region, but are effectively a well-paid relationship manager, recycling strategy and procedure that is fed to you during your late night video conference meeting.
The second frustration is caused by the fact that financial and service organisations (especially banks) often have a lot higher revenue/cash ratio, which effectively means that procurement is seen as a less critical contributor to profit compared to revenue generation. Due to this and with some justification stakeholders and business leaders of these organisations are very difficult to both engage and educate on the importance of procurement in contributing savings to the bottom line.
The most highly sought after procurement roles within the service and financial sector are found within the mid-tier level, where high-end control is not so important, but getting exposure to leading edge initiatives is. Candidates sitting between 80k and $150k usually gain most satisfaction from a three-year tenure.
When approaching these individual businesses, it is wise to take each opportunity on its merits and probe at interview to gain a deep understanding of the organisation’s culture and commitment to procurement. Salaries are slightly less in services compared to the financial sector, but procurement initiatives are often led from upstream, with more emphasis on compliance and investment in larger procurement teams. This will offer strong scope for progression within the business and organizational movement is often easier to achieve.
Retail
The Australian retail sector from a procurement and supply chain perspective tends to replicate the same characteristics as are found in retail sectors in other parts of the world. Namely a strong emphasis on employing the best logistics and supply-chain experts, with less energy being spent on obtaining the very best procurement talent. This trend is more obvious with the larger retailers such as the large supermarkets, whose pool of current and potential suppliers is often a lot smaller. This is because of the fact that the large retailers need large suppliers that are able to operate on a bigger scale.
As well as the commercial reality that certain retailers often have to use certain company’s products and brands negating a lot of their potential to make strategic sourcing improvements. All of which means there is often less value that a strong strategic sourcing candidate can bring to the big retailers compared to a gifted and innovative logistician.
Although this may be the trend with big retail organisations, the more innovative retailers operating in more competitive and dynamic market places can offer the procurement professional a solid and challenging career and the chance to really make an impact on the company’s bottom line.
The work/lifestyle balance is rated as average due to the fact that there is often a fair amount of traveling involved and the fact that the industry is often characterized by major projects which are often disruptive and less conducive to a settled home/work balance.
Salaries in retailing are good with companies willing to pay for specific supplier or product expertise. Due to the need for specific industry knowledge and experience, it is often difficult for retail procurement and supply chain experts that have spent a lot of time in retailing, to transition themselves out of industry and into other market sectors where their specific retailing know how is less sought after.
Having said that, at a junior level due to the fact that retailers often spend a higher than average amount on training, strong junior retail procurement and supply chain professionals are often the most sought after.
Engineering
Not unsurprisingly, considering its abundance of raw materials, Australia has a strong pool of engineering procurement and supply chain talent. However, due to the immense scale of the country, the engineering expertise and talent tends to be concentrated in a few world renowned companies.
Whilst this is the general trend, there are however some really interesting smaller companies that are pushing the boundaries on conventional engineering and looking at the next level of innovation.
The engineering sector offers the procurement and supply chain professional an opportunity to really make an impact on the company’s activities and profits as the supply of goods and services in this industry is often critical to the operation of the whole company. Spend volumes can be large as can be the pressure to ensure that goods and services are exactly fit for purpose and have a high level of quality assurance and compliance.
Engineering pay levels are good, but this is in some respects due to the fact that the locations of these companies is often in less desirable parts of the country, they are therefore forced to pay more to attract new employees.
For procurement professionals, engineering offers an innovative and high profile industry in which to work. There is a real need for good supplier relationships and a strong focus on quality and innovative procurement solutions.
From a supply chain point of view, practitioners often face the challenge of moving products to remote parts of the country and coordinating the timing of their arrival with ever-changing timescales.
Consulting
Without doubt, for the career minded procurement/supply chain applicant, the consulting sector offers the greatest rewards in both salary (at the senior end) and career scope. Consultants get exposed to a fantastic array of projects and travel opportunities at the expense of sacrificing a work/life balance.
In our experience, every year spent working within a boutique or international firm is the equivalent to at least two years working within a corporate, with regards to attractiveness as a candidate in the market. These firms use modern IT and telecom technology such as video and teleconferencing, remote server access and online department management.
To ensure their workforce is as flexible, contactable and more importantly for them to be as billable as possible. Leading profit generators within procurement or supply chain can be accessed on line from any where in the world to give advice on particular projects being undertaken.
Career progression can be slow, but unlike many other industry sectors, when you climb, the benefits are substantial and measurable taking into account responsibility, salary and expectations on performance. If you have strong tertiary qualifications and a strong analytical background within a procurement or supply chain role at the junior level (60 – 75k) you have the greatest chance of entering the consulting marketplace.