Outside-in Changes to Procurement = Inside-Out Changes to Procurement Service Delivery

We featured a post yesterday highlighting some audience polling question results from a recent Coupa event, and I thought it’d be good to drill into a few of the findings.  Keep in mind that these questions only allowed a single choice, so it downplayed areas that would have ranked higher on a multi-choice answer, but the results are still useful....

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The most interesting finding is a confirmation of a trend I’ve been seeing the last 3-4 years regarding the increasing importance of supplier relationship management and the focus on an “outside in” approach regarding managing procurement versus an “inside out” supply base rationalization via strategic sourcing approach. So, looking forward to the year 2025 (because 2020 is just not far enough ahead anymore!), while 35% of firms will be “moving towards centralized technology-enabled procurement function,” the rest will be taking a more external approach by optimizing supplier relationships (36%). Adding in supplier risk mitigation and dealing with macro economic factors pushes this outside in approach to nearly 50%.

This makes sense. As Jack Welch once said “when the rate of external changes exceeds the rate of internal change, the end is near.” Still, most procurement organizations are struggling enough just to stay in step in with the business. As the old adage goes: Ginger Rodgers had to dance as well as Fred Astaire, but backwards, and in high heels!  So, for procurement, you clearly need to know your ‘dance techniques’ - market intelligence, sourcing execution, savings tracking, commercial/legal expertise, supplier management, etc. as shown below.

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But, you also have to be adept at knowing where your partner is going and how you can lead the dance without being too heavy handed.  The top cited role that procurement plays based on the survey from the Coupa is that of “internal consultant.”  But, consulting is not a one-size-fits-all approach. For example, in the 1969 classic book “Process Consultation” (you can read the Amazon book reviews to get some of the key ideas), there are two types of consultation: expert consultation and process consultation. The former is about bringing your expertise to show stakeholders the right way to source and buy. In the latter, you are there to facilitate the process and help the stakeholders get to the same place, but not by explicitly impressing them with your prowess and 99-step sourcing process. The art of influence and change management is understand the current the diverse risks/rewards that different stakeholders perceive, and to facilitate a process that gets to a new vision and new set of behaviors by bringing in your expertise (and theirs!) elegantly rather than heavy-handedly.

We’ll be writing a lot about change management, influence, talent management, and related topics in the near future. There are many interesting developments in these areas being pursued by leading practitioners and service providers alike, and we’ll be bring you some of the “best of the best” in future pieces.  Stay tuned!

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