Transformation of Procurement in Your Organization
Transformation is a hot topic in procurement today.
It would be easy to think about this as the next project on your roadmap.
I believe that this must be a mindset.
Transformation is ongoing not static.
Efficiency and effectiveness should be the driving forces.
The pace of business is accelerating.
Speed is essential.
If I could share one goal for your consideration, this is it.
- People need information at the time of decision even if they haven’t adequately planned.
It is a simple concept, but it can be quite challenging to put in place.
If you are doing business the way it was done even five years ago your organization is at a disadvantage versus competitors who embrace change.
Here is some perspective gained from conversations with leaders in procurement at the recent Marcus Evans CPO Summit in Las Vegas.
- Leaders of business units must believe that procurement will help drive profitability and competitive advantage
- Ease of use and responsiveness are essential to secure stakeholder support and buy-in
- Market your successes internally
- Coordinate measurement with Finance
- Address challenges with plans not excuses
- Changing the culture is a given if you are to succeed
Some of the common challenges that were shared with me include:
Gaps
- Identify the gaps in people, processes and systems. Unfortunately, there may be more than you anticipated.
Strategy and Organization
- Identify the people you need to support you inside your group and in the overall organization and start getting them on board one at a time. Support from senior management is needed.
- Even the best organizations only have 65% of spend under management. Most are under 40%. Spend analytics have helped many groups identify low-hanging fruit.
- Documented savings will support budget requests for needed resources. Finance must support your analysis. Be willing to give and take. With so many opportunities there are plenty of ways for all to look good.
Document Processes
- Document how sourcing is done currently. For most organizations there are multiple ways products and services are purchased.
- If rogue spend is an issue, it is likely that the process in place is too cumbersome or too slow.
- If this was your company and you needed something now, and your purchasing group wasn’t responding, what would you do?
- I believe that it is useful to put yourself in the requestor’s shoes. Their supervisor doesn’t want to hear that “purchasing is holding us up”.
- Listen with an open mind to stakeholder suggestions and frustrations.
- People won’t change unless your way is easier and faster. They also want to know that they are part of the solution.
I will share more thoughts and ideas on transformation next week.
Ask better questions, make changes and 2019 will be your best year ever.
Action Step: If you are uncertain where to start the process of change, a procurement professional like myself can provide guidance and expertise to help your organization achieve the results you want.
If you want to go explore this topic in greater detail, please contact me. I invite you to request 30-minute discovery conversation. In my experience the next step will be apparent at the end of the call. I never assume that what I have to offer will be right for everyone, so don’t expect a sales pitch. You can reach me at 973-936-9672.
If you would like to know more ways to reduce costs without changing the way you do business, simply give me a call or send me an email with your contact information and the best time to reach you.
You Won’t Drift to Success©
Commit to taking the next step.
Until Next Time, I Wish You Great Success in Your Business and in Your Life
Mike Jeffries