Competency Requirements on Procurement Beyond 2010 : A case study on Siemens Industrial Turbomachinery in Finspong and Lincoln

Abstract: This Master’s thesis was commissioned by Siemens Industrial Turbomachinery,subdivision Industrial Gas Turbines (PGI4) in Finspong, Sweden, and in Lincoln, England. The company has been part of Siemens Power Generation Industrial Applications since its acquisition in 2003. In this connection, the strategic importance of procurement became more recognised and the procurement organisation has undergone many changes. Procurement, however, is a function very much affected by changes in the business context,making constant adaptations and transformations necessary. In order to ensure that the procurement organisations in Finspong and Lincoln are well prepared for future challenges, the purchasing director at Siemens PGI4 asked us to investigate competency requirements on procurement beyond the year 2010, based on the impact of macroeconomic trends. Furthermore, a gap analysis was requested in order to compare the current competency level with the required future competency level. The task was approached by studying literature and interviewing well-known purchasing professors. From this we concluded that the macroeconomic trends of greatest relevance for Siemens PGI4 are globalisation, outsourcing, development of information technology, increasing demands on corporate social responsibility and changing consumer patterns. Our investigation of the impact of these trends on procurement resulted in several requirements for the future. For example, risks must be managed throughout the whole supply chain, as the complexity of supply increases as a result of globalisation and outsourcing. The requirements are presented in terms of competencies and roles that need to be assumed. We mapped the current competency level by means of questionnaires filled in by the personnel concerned. We then compared this with the required future level. The gap analysis indicated that gaps within management of relations, for example, exist for several of the studied function profiles and that today’s way of handling risks will not be sufficient in the future. Still, the majority of the competency gaps are not very large. We believe therefore that by taking care of the existing gaps and installing a supply chain risk management team, the procurement function can live up to the future requirements until the year 2010. We recommend the identified crucial roles and competencies to be taken into consideration when recruiting new employees and when developing existing personnel. However, continuous review and update of competencies will be needed in order to keep the company competitive.