Procurement Solutions – a key spend category, so treat it like one

Today, I’m going to try and change the way many of you think, or at least give you a new perspective. We'll see how that goes...

Let’s start with a question – what is the most important spend category that you or your wider procurement organisation manages?  Now depending on the business, you might say some critical component or raw material; or mission critical IT solutions; or even marketing or professional services in some cases.  But there is one that is, or should be, very high on your list, particularly if you look at it from a selfish ‘success of the procurement function’ perspective.

And that is the category we might term ‘procurement solutions’.

We have touched before on the concept that the best CPOs and procurement leaders now see their role as bringing together internal resource (staff) and external resource (purchased software, outsourcing services, research, consulting or interim support) to deliver the best results. But how many organisations actually look at this range of procurement solutions as a spend category in its own right? With all the disciplines and analysis and rigour that we would apply to those categories we mentioned earlier?

That would mean for instance segmenting the market into sub-categories (which might include P2P software, category-driven outsourcing, market research services, etc).  It would require proper market and supplier research into capabilities, strengths and weaknesses of providers.  Then it would mean developing clear strategies to achieve better value and performance from your spend in these areas.

But, as I hinted in the first sentence, not many organisations approach matters in this way. Actions tend to be reactive, and solutions chosen to respond to an immediate and sometimes narrow perspective.  “We need some interim help in this area as our engineering stakeholders have a major capital programme this year ”.  Or, “we should probably look at buying a contract management system”.

Once we think about it in these terms, then of course we should apply CatMan approaches here as elsewhere. And what makes it even more important is how central all this is to the success of procurement. Whereas you might just about get away with the odd slip up in most spend categories, this is one where failure can set back the whole image and credibility of procurement significantly and for many years.  (Forcing users into using a system they hate is a great way of destroying  confidence in the function, for instance).

So treat ‘procurement solutions’ as a spend category. End of message, for today anyway. But later this week, we will be back with some thoughts and news about how Spend Matters can help you succeed with that goal.

Voices (3)

  1. Pierre Mitchell:

    An excellent topic Peter! And I guess that would make us category managers of sorts to this broad and dynamic supply market called Procurement Solutions (Tech & Services).

    I touched on the topic here at the link below. It is “Plus” level premium content, so it’s a whopping $20 / month, but I’ll see if I can get you a 14 day free trial to access it. Oh wait, anyone can get that too! 🙂

    https://spendmatters.com/2013/04/09/winner-take-all-is-a-losing-strategy-for-sourcing-procurement-solutions/

    wait – I found a few Freemium pieces that touch a bit on it…

    http://spendmatters.com/2013/12/20/twelve-days-christmas-procurement-best-practices-wish-list-day-two/

    http://spendmatters.com/2014/01/09/2014-market-prediction-great-procurement-services-market-mashup-land-grab/

    1. Peter Smith:

      And I shoudl have credited you Pierre for getting me thinking this way in the first place through many of your excellent articles! Thanks for highlighting them.- highly recommended!

      1. Pierre Mitchell:

        Well, that’s very kind of you sir. I have been enjoying your spy tales of intrigue from the CIPS dinner. Good fun. Reminds me of my visit to Sapphire last year. AribaLive is next week in Vegas (with real gambling). I may not be there… but maybe I will. 🙂

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