Three high-level principles for Procurement Transformation

- November 29, 2012 1:31 PM
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We asked a couple of weeks back – just what is procurement transformation?

Is it something real and meaningful, or just consulting nonsense.  After our original piece, and the excellent comments we had (thanks again to everyone who chipped in), I’ve come away with three rules, criteria, factors, whatever we want to call them.

They probably create as many new questions as they answer, but here they are.

  • Procurement transformation means delivering significant results and benefits, (and measurable please), to the organisation.
  • To call it transformation, it needs to be a step change in performance and benefits, which we would suggest means both significant in scale AND achieved relatively quickly (otherwise it would be a slope, not a step…). It cannot be just the usual continuous improvement that we should all be aiming for constantly.
  • And it must … no, let’s rephrase that. It is very unlikely to be effective if it merely looks at the procurement function , as opposed to the wider organisation . It will generally address, and needs to address, how the whole organisation interacts with and takes advantage of its supply markets.

There are other second order factors that will come into play in many if not all transformations, and that got mentioned in our previous discussions – people, skills, technology and so on. They arguably sit under these three points.

Now, this is useful (I hope) to help us get some understanding and a common view of the key principles. However, it does not of course help us to achieve transformation. So watch out for more on that topic shortly…

 

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