New Research/Opinion: If Procurement Ain’t Broke, You Should Still Fix It!

Across the Atlantic, my colleague Peter Smith recently authored a paper with the curious title: If It Ain't Broke, Fix it!. In this great, readable op/ed, Peter pens a lively piece that examines the need for constant innovation in procurement. A bit superficial as research papers go, yes, but probably one of the most useful pieces of work we've published in the past year -- and that's saying something. We begin the argument in the whitepaper by suggesting that there's a big temptation when things are going well to just keep going, to accept the status quo. It can seem like nothing can possibly go wrong. All through history we've seen examples of people, companies, even whole civilizations who have thought 'everything's fine as we are, we don't need to change'. But if you're not changing or growing, we make the case, you're declining -- or dying.

Later in the paper, Peter makes the case for a number of areas where procurement can "fix it" and make a new mark -- even if the general appearance were of functional areas or capabilities that were not necessarily inadequate when viewed from an internal lens. These include market-informed sourcing, purchase-to-pay (P2P), supplier and supply chain risk management and staff capability and development. Consider the case of supplier and supply chain risk management. Here, Peter notes that while this whole area has generally had more focus in recent times, highlighted by disasters (man-made and natural) such as the Japanese tsunami and the Deep Horizon, both of which raised many questions about supply-chain risk, many organizations continue with processes that certainly need fixing -- if they exist at all.

Further commenting on the topic, he suggests that Spend Matters' experience is that most organizations and procurement functions are working at a level that can most kindly be described as 'basic', with only limited analysis or understanding of the varied types of supply chain risk, let alone real mitigation and management strategies or plans to handle their risk profile. Yet this is an issue that can bring procurement right onto the main Board agenda, and demonstrate a strategic value to the function way beyond the tactical cost savings imperatives.

Beyond just topical analysis and the breaking of parts of the business that truly need breaking, how can organizations get started down the right innovation path? Here, Peter offers up that there are two key issues. The first is the time needed both to come up with ideas and plans, and then to implement. Here, different people have different approaches. Some find time to think during leisure hours -- with inspiration hitting in the gym, the garden or on the beach. Others find that scheduling thinking time during working hours is effective -- but you need to find a way of avoiding constant interruption. You must somehow make space for thinking and new ideas. But above all, making sure you are exposed to people who look at matters differently to help shake thinking out of the traditional ruts and grooves.

This brings us to the second key consideration in breaking stuff. And that's finding the right ideas in the first place. One idea Peter proffers up here is to seek out mavericks, people both from inside and outside the organization. The slightly odd category manager who doesn't quite fit the mould but occasionally comes up with a left-field but brilliant idea, that supplier who wants to talk about the apparently stupid way of delivering the service, the academic who can stand up at a conference and argue against every accepted tenet of procurement thinking...they are people to cultivate.

If you're looking for some lighter but absolutely important work reading over the long Thanksgiving weekend in the states or just need something to inspire you next time you're coming up with ideas to take to an internal procurement staff meeting, check out our latest piece of research (or perhaps a better label might be "op/ed"): If It Ain't Broke, Fix It!. We're sure you won't be sorry.

Jason Busch

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