Knowledge Management in Procurement Organizations

Spend Matters welcomes this guest post by Mayank Saxena from GEP.

The Christmas and New Year holidays couldn’t have come at a better time for me – reason being the hectic Christmas shopping we had to do right before the annual shutdown. Getting into December, we realized that there was quite some money that needed to be spent before the end of the year and very little time to do so! Although our sourcing process is very streamlined and our suppliers and business stakeholders can handle quick turnarounds, there was one key thing that dawned on us. I will summarize our realization in one of the most oft repeated statements of the season: “How I wish I could get my hands on the RFP that we did for this item, back in 2011!”

FREE Research: The 4 Faces of Procurement

Organizations change, people move on and so does the knowledge that reside in their heads. Therefore it’s really important to capture, store and manage tacit knowledge. However, there is more to knowledge management (KM) than just that. Let’s look at each of these aspects and see how they are applicable to a procurement organization.

  • Discovery of existing knowledge: If you were to compare the collective knowledge of the procurement group vis-a-vis other groups or business units in any organization – you would be surprised. Imagine the breadth of knowledge that comes from interacting with employees across manufacturing/engineering, IT, logistics, product development, marketing, etc. Existing knowledge within the procurement group, with regard to a given sourcing projects, can be divided into 2 categories: (1) final deliverables (2) intermediate information. Final Deliverables include contracts, RFP responses, RFP drafts, etc. Intermediate information includes documents such as initial supplier list, negotiation strategy document, any market intelligence done prior to project launch. Even some of the most mature procurement teams make the mistake of archiving only the final contracts. Useful information collected during the course of a project is usually discarded after completing the sourcing exercise.
  • Creation of new knowledge: Procurement organizations have had to double and treble their speed to value over the past few years. On top of this, it’s not uncommon to find a procurement team that is short staffed. However, in all the rush of churning around projects, do not miss out on the strategic element of the process. To gauge where you stand with respect to KM, ask your team:
    • Do they conduct thorough market research before they start a new sourcing initiative?
    • Do they speak to a fairly representative set of stakeholders – internal and external prior to floating the RFP?
    • And most importantly, what percentage of the above mentioned activities is documented? Does it follow a template or a structured process/approach?
  • Acquisition of knowledge: In the age of knowledge economy, to stay ahead of the curve, each organization has to invest in acquisition of new knowledge. New knowledge comes from interaction with new sources of information – human or machine. Ensure that your team reaches out to external sources of information from time to time. These sources could be subject matter experts, consultants, market research publications or industry seminars. However, don’t forget to (1) document the learning from each external interaction and (2) evaluating the return on investment for such external acquisition. One new learning per month should be the goal of each member of your team. 
  • Storage, sharing and usage of knowledge: One of the most obvious facets of knowledge management is about storing, managing and organizing the knowledge that has been acquired or discovered. Although technology tools can play a very important role in this process, only a perfect combination of organizational culture, processes and structure will ensure that your pursuit of knowledge is successful. Tacit knowledge is all about people and you may need a whole lot of change management before any of your investments in KM can bear fruit. 

For more interesting thinking on procurement, visit the GEP Knowledge Bank.

Voices (5)

  1. Adarsh Mishra:

    I went through the discussion on this forum and was really excited with the insights on benefits of KM in sourcing and procurement. Currently, as a summer intern I am working on a project on implementing KM in logistics. It would of immense help if you could share your email ID for further deliberations on this topic. Thank you in advance.

  2. Minal:

    Nicely done!

  3. Nthabiseng BN:

    Knowledge Management is the most crucial aspect in any business. The sad part is that not all organisations recognise the value and costs of KM. It brings to mind that the KM group discussion ought to be given platform and promoted in a more applicable and practical approach. Once we, as practitioners are able to formulate models that are easy to use and implement, then we would make a meaningful contribution to our organisations.

    1. augustine caivin:

      Knowledge Management is the most crucial aspect in any business. The sad part is that not all organization recognize the value and costs of KM. It brings to mind that the KM group discussion ought to be given a platform and promoted in a more applicable and practical approach. Once we, as practitioners, are able to formulate models that are easy to use and implement, then we would make a meaningful contribution to our organization.

  4. Bill Kaplan:

    It is great to see others adressing what should be a critical area of interest and concern for contracting and procurement professionals. I have been a practicing professional in contracting for over 40 years and a KM practioner for 16 years. We are in an experiential profession so the ability to capture, adapt, transfer, and reuse what we know about what we do in contracting and procurement.

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