Resource alignment is a rather simple question compared with the broader question (and opportunity) concerning where procurement, overall, should be spending its time. This sentiment is echoed in KPMG’s analysis, FUTUREBUY: The Future of Procurement – 25 in 25, when the authors observe that procurement executives almost universally agree about the “concept of channeling procurement efforts” appropriate.
But the case of one CPO in the analysis stands out. This procurement executive opined that “we need to think about whether our people are focused on areas where they can add the most value to optimize spend by channel. We want to limit their time on routine stuff, and get them working right away on the difficult stuff.”
Getting resources aligned against “the difficult stuff” is no easy task, considering all the fires procurement historically has had to fight. But it can be done. Consider the example, according to the same individual, of the “many” and “major individual buys at our large power plants. Each plant has innumerable unique characteristics, they are all geographically disparate, and all use complex technologies. This is difficult to manage, but is exactly where we should be spending our time.”
Getting results in this model requires asking innumerable questions beyond apples-to-apples supplier responses. For example: “Can we get blanket agreements to leverage our relationship with the suppliers of these technologies, and outsource the work if we find others can do it better than us? Are we utilizing multiple suppliers for certain types of items? Even if they are not high-dollar items, we may be overlooking a big opportunity. We need to think differently about what we focus our attention on in procurement.”
Indeed we do! But given limited resources, what are the best ways of doing this? For one, it pays to open up the sourcing process past a classic RFP model (with five, seven, or nine steps – take your pick). By having the right resources that know how to ask the right questions to solicit internal and supplier creativity in structuring solutions that are not based on rigid RFP specifications, procurement teams will be taking a step in the right direction!
You can download the full KPMG paper if you’re interested in more on the topic. Even if you don’t agree with everything in it, we promise it will get you thinking!