The Twelve Days of Christmas in Procurement Best Practices

- December 19, 2013 1:38 PM
Categories: Procurement Commentary | Tags: ,

Santa Klausi

It is the holiday season, and Chanukah is over, so what better way to wrap our 2014 predictions than with a merry little Christmas theme? Actually, as we mentioned on our deep webcast on the topic, these are not so much short-term predictions about 2014. Rather, it’s more of a wish list for the things that we think will eventually happen. So, we’ll put it out there now and look brilliant in 10 years when it finally happens. That’s the story at least and we’re sticking with it. So let’s get started.

On the first day of Christmas, my CPO gave to me…

A compelling procurement mission, vision, and strategy about running procurement like a strategic services provider and like a proper business – not as the executor of a bunch of n-step siloed processes. If the “promise of the brand” is neither clear nor compelling, then the rest of Christmas wishes we’ll discuss will mean nothing. It starts with leadership.

Procurement organizations need a new brand, along with the understanding that value is about strategic supply services to help the enterprise design an extended supply base. So, this starts with the “promise of the brand.” This is not the muddled and verbose descriptions that exist on so many LinkedIn profiles, but something more powerful that gets at tapping innovation and advantage from supply markets.

But, to fulfill that promise, procurement organizations will start becoming much more deliberate in how they develop their capabilities and “sell” their ability to fulfill that promise. It’s about execution too. Bottom line? They will need to learn how to become “vendors.”  That’s often a hard sell, because many procurement folks are wired to view suppliers as the opposite of themselves. That’s a mistake. Everybody sells.

But there’s also a bigger trend going on regarding the emergence of more compelling third-party business process services (which many call “business process as a service”), as well as the emergence of “Global Business Services” (think shared services on steroids), that will continue to impact procurement at the Fortune 500 firms. And we’re talking about high-impact services, not just transactional ones that should be leaned out and automated. But, even for smaller firms, the ability to have a model for assembling such services is critical. That includes information / technology related services too (e.g., SaaS and not just BPO/Consulting/Managed-Services). And to do that, they better know what’s available in the market, but we’ll save that for another Christmas wish.

So, to sum up: Buyers will start acting more and more like suppliers in the services supply chain – and that’s a good thing. You can’t have a supply chain running at Six Sigma levels and have the related processes like Procurement running at 2 Sigma. That’s a recipe for the finance Grinch sneaking in and stealing all the presents to come.

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