Dr Ian George on Procurement Transformation – Positioning the Function

(We’re delighted to feature another post in the series on Procurement Transformation from Dr Ian George. Ian is a senior partner and practising consultant at Agile Partners, has an engineering background, and has worked in procurement for the past 20 years. His doctorate looked in detail at procurement transformation programmes).

The interesting thing about people who work in organisations is that they automatically position each other based on job title and what function they work in. When I completed my doctorate I was congratulated by someone who was amazed that you could get a PhD in professional shopping.

These preconceptions can help or (more likely) hinder the development of Procurement as a strategic business function, rather than the assumed necessary overhead. If the preconceptions are negative then the onus is going to be on Procurement to prove them wrong in a constructive way.

Doing the basics well is a good start. If budgets aren’t being met and requirements aren’t delivered on time then no-one is going to listen to a function suggesting they could be doing more. For the function to become a safe pair of hands it needs robust processes and capable people. This means continually developing its core competencies and then steadily going further in order to capitalise on emerging opportunities. Making a virtue of doing the basics well gets noticed by the senior management team. Most of their life is spent listening to why things didn’t get done and why there are lots of problems. They like consistency and reliability.

Achieving a state of recognition for the strategic and operational contribution made by Procurement requires a robust set of measures that reflect the business need. The mistake so often made is Procurement reporting its internal operating measures, such as spend per category manager or maturity level. Very few people in the business care.

What they do care about is the impact it is having and how many problems ultimately get laid at the function’s door.  When the Exec can empathise with what they are seeing, they are more likely to engage and sponsor the development of the function. This means speaking the language of the senior management team and acting accordingly.

The development of Procurement must never be seen as an expansion of the function’s power over other parts of the business. This is the path to political stalemate. Instead, building a vision of what it would be like if the various procurement processes worked seamlessly with those of other stakeholders to develop and deliver the objectives of individuals, teams, functions and the enterprise is more likely to illicit an engaging response.

Implementation of such a vision would suggest that ‘Procurement’ as a function becomes procurement as a set of processes that interact across the end-to-end enterprise. This not only requires procurement maturity, it also requires organisational maturity.

However, if Procurement is to become acknowledged as the leading competence in supply management, then it is going to have to start thinking very hard about how it presents and markets itself to the rest of the world. Perceptions and expectations take a long time to change and the gains can be wiped out by remarkably little evidence. If Procurement is to achieve its full potential then it is going to have to fight very hard and keep going even when the odds seem insurmountable.

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First Voice

  1. RJ:

    A really helpful executive summary and I’d appreciate some debate on the “robust set of measures that reflect the business need”. I totally agree that the business is generally uninterested in the performance of internal operating measures but the default measure of Procurement’s benefits, i.e. savings, is almost inevitably counter-productive in that it can build resentment, usually misrperesents the true value to the business and can drive the wrong behaviours. Yet on the other hand, more balanced measures will often be identical to those of Procurement’s clients and so it is difficult to differentiate the direct value that the Procurement team creates. It’s absolutely correct, therefore, that this also requires “organisational maturity”. I look forward to a follow-up post.

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