Procurement Strategy and Organisation – the Subtle Drivers to Consider

Everyone knows that the procurement’s strategy and organisational structure (which are obviously closely aligned) must follow the wider organisation’s strategy. If there is an organisational imperative to cut cost, then procurement following a strategy of supplier development and innovation probably isn’t going to get the Board excited.

But there is a lot more to it than simply being mindful of the stated or obvious organisational strategy. To maximise the chances of success for the function, the way procurement conducts itself also needs to be aligned with a broad range of what we might call “cultural” organisational factors. If the CPO and other senior executives are not sensitive to these, you can come unstuck very easily. And often, the more subtle factors don’t get fully considered when strategy (and organisation) is being designed.

What do we mean by this? Let’s take Mars as an example, the first firm I worked for. The defining cultural factor there was the ownership by the Mars family, who still (in those days at least) were very involved and active. Now you might look at the broad business strategy as one of high-quality snack products, with both brilliant branding and super-efficient operations (including procurement and manufacturing) providing barriers to entry.

But that would not tell you much actually in terms of how you needed to behave to succeed. For instance, the Mars culture coming from the family was very active and challenging – every manager was expected to continuously improve what his or her predecessor had done. New ideas were welcome. However, if a decision was made, then compliance was pretty much 100%. That came directly from the top – “if Forrest Mars says do something, you do it. Or you leave”.  That is how it was described to me.

So the culture was one of challenge, discussion, argument, which could be pretty aggressive at times. But the culture was also one of driving matters through in a single minded manner once a decision was made, with high compliance to policies and those decisions. That was quite a contrast to the Department of Social Security – or indeed NatWest!

There are other examples of how culture impacts on what makes an effective procurement strategy. Is the organisation local, regional, national or multinational in its outlook? That is a fairly obvious one. Or is the culture one of change and innovation, or tradition and caution? That might be just as important when you’re designing the procurement strategy. I have talked about this when I do a session on the Birmingham University Procurement MBA Class, and we have come up with over a dozen of these “cultural” factors that might need to be considered.

What are they? Well, you will have to come along to our session on the morning of February 10th - “Modern Procurement – What does the future-proof structure and strategy look like?”, with Enrich and Oracle, to find out. Join us at the Oracle offices just off Moorgate in London for the morning session (followed by lunch and networking). We've also got David Lawson speaking, from Guy's and St Thomas' NHS Trust. He is one of the most talented young CPOs in the UK, and having had a sneak preview of his views, we might get some good argument going between us!

Do register here now, and please note capacity is limited by the venue, so don’t delay.

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