Aligning procurement and business strategies – don’t get fired

I spoke last weekend at the Birmingham University Procurement MBA course on the topic of "Aligning Procurement and Business Strategy".  Birmingham has had one of - if not THE - best procurement MBA courses in the UK for many years, so it was good to have the chance to participate, and it was an enjoyable experience - for me anyway. I'm not sure whether the students felt the same, but no-one actually dozed off as far as I could see, and they seemed pretty engaged and interested!

We started with a bit of Porter and business strategy then linked that to different procurement strategies.  But the central element of my argument was that there are many other attributes of organisations that you need to consider as you're building your procurement plans - and that applies to making sure both category level and overall strategies are appropriate to the wider organisation.

By "attributes" I mean things like how the organisation is structured, its operating style, culture and values. And those attributes must be taken into account by procurement if you’re going to succeed. So, for instance, if a large global organisation is structured in a highly de-centralised manner, with powerful country managers, there's little point in the CPO trying to set up a single procurement team in Luxembourg and expecting immediate compliance to global deals.

And sometimes even the softer 'values' can - or should - influence procurement approaches. If an organisation has values that are very supportive and caring, then implementing a strategy for a particular category that relies on reverse auctions and regular supplier thrashing may well cause issues. Or if an organisation prides itself on being fast-moving, dynamic and risk-taking, then a new P2P process that requires multiple sign-offs for requisitions and tedious form-filling will be fought off vigorously by the organisation’s cultural antibodies.

There are several examples - and I mentioned a couple at Birmingham, no names of course - where CPOs have lost their jobs, not because of any fundamental issue of capability or delivery, but because they didn't align themselves with the broader organisation in some important manner. Don’t make the same mistake…

 

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