CEB Procurement Transformation Leadership Metrics (Part 2)

Continuing with lessons from CEB’s Ben Federlein on procurement transformation success – comparing top and bottom performers – let’s turn our attention to the types of investments that have maximum impact on a procurement organization’s ability to find new sources of value and drive transformation towards higher-value opportunities (and what areas don’t).  Beginning with those that don’t, while reverse auctions, eRFX, P-card, and outsources procurement can certainly create efficiencies and savings, they are not associated with driving transformation of procurement’s project portfolio (they came in at 0% in the CEB study).

In contrast, areas such as SRM skills, internal relationship management and category management skills have a direct impact on maximum performance (receiving relative percentage analysis returns of 25%, 37%, and 43% respectively). From this, we can take away that going beyond standard internal business relationships that might be cordial (but are likely more differential and less challenging than they should be) is critical to procurement success.

Further, as Ben observes, the most successful procurement organizations that go through a transformation process “challenge business partners in a healthy way by identifying underlying assumptions” in past decisions and actions – and mental models that might be holding back more creative and effective supplier engagement. Moreover, these leaders also possess deeper “influencing and selling ability” like the most effective suppliers sitting on the other side of the table. The sum of these interpersonal and leadership skills can result in an easier ability for procurement to “redirect” the business to “higher value solutions” than the status quo – and to engage suppliers more effectively as well.

In Ben’s words, if you get all three of these areas right (supplier relationship management skills, international relationship management and category management), then you’re “at the top” of your game – and in the leader quartile of procurement transformation performance. The sum of these efforts (and skills/competencies) on the interpersonal side can help transition the role of procurement to “trusted advisor” to the business, as Ben describes it.

But what are the specific talent attributes that have the most impact in procurement effectiveness for selling ability? The talent attribute with the biggest impact on the ability to sell ideas internally is the “challenger ability” according to the CEB.  It has a 47% maximum impact on the ability to sell ideas. Communications and interpersonal skills were second, at 41%. Leadership and business acumen come in third at 40%. Reasoning/thinking (39%) and strategy creation and execution (38%) round out the list.

As Ben suggests, “these areas are all important” in part because as we know, effective category management is a “tough job.” But those who can effectively challenge underlying assumptions and engage stakeholders through effective confrontation have a direct influence on the ability of the overall function to sell ideas and their value internally. Yet CEB research finds that only 17% of CPOs report that their teams have high levels of effectiveness when it comes to the challenger ability. One of the major challenges faced by the other 83% of organizations is a lack of effective “challengers” in the function. Curiously, this concept of the ability to challenge, as Ben suggests, comes into play in sales effectiveness as well. In fact, “challenger” types in sales tend to be among the most effective producers. See the CEB’s book on the topic: The Challenger Sale.

Based on the research in this book, CEB identified a number of different “types” of sales professionals. 21% of the sample were “hard workers.” 27% were “challengers” who were prone to debate and push customers “without being pushy.” 21% were “relationship builders”, 18% were “lone wolf” types and 14% were “problem solvers.” And the most effective sales performers? 30% of overall top performers were “challengers” compared with “lone wolves” (25%), “hard workers” (17%), “problem solvers” (12%) and “relationship builders” (7%).

Without question, we need more effective “challengers” in the procurement function. But I ask our readers: do we have the right demographic and psychographic make-within typical procurement organizations to create an effective culture that can challenge the business and suppliers? I think we all know the answer…

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