Procurement Excellence – Why Is It So Hard To Sustain?

While a small number of firms have maintained a leadership position in procurement performance over the years, many others have waxed and waned in terms of how procurement is regarded both internally and externally.

That struck me during a recent discussion with a friend who had been working as a consultant with a FTSE-100 firm, working on some procurement initiatives. While he enjoyed the work, liked the business and the people, he was shocked at how even basic procurement processes, practices and policies simply weren’t in place.

That was particularly surprising because we both remembered a CIPS President from the 1990s who was then Procurement Director for this firm. He was a top-class professional, and the firm was clearly a leader in terms of its procurement activities. Yet over the last 20 years, it wasn’t just that little progress had been made; procurement had clearly gone backwards in the business.

We agreed that certain firms have at different times been both high performances and good “seed-beds” - sources of procurement people who then went out and spread the message into other organisations. We thought of SmithKlineBeecham, Ford, NatWest, even the Coal industry at one stage that fell into that category.  London Underground had the best procurement graduate scheme in the business a few years back. But while some continued to do this over time, others faded as centres of procurement excellence and capability.

This came up in another recent conversation, talking about the problems with the British Airways IT system, and whether there might be something there around poor supplier management. Now it looks like the origins of that issue may be nothing to do with “suppliers” but the observation from someone who knows the organisation well was that procurement is less powerful in the firm than it was ten years ago, when it bred many good people. (It’s worth noting that the current CIPS Chairman, Tim Richardson, is now BA’s Head of Property, not Procurement).

That gives one clue as to why these changes happen. BA is of course now part of a larger international group, IAG.  Maybe there is huge procurement capability at group level now? In other cases, corporate changes may lead to a loss in procurement capability. The first firm we mentioned (that my friend was working with) is actually a totally different business to the one that provided the CIPS President all those years ago. New elements of that firm grew, obviously without ever developing a great procurement culture, whilst what was the core part of the business was sold.

Or sometimes it is more personal. Perhaps the CPO is an inspirational figure, or someone with huge credibility at Board level, and when they depart, the vacuum does not get filled. Sometimes it might be changes at that Board level, so we see a CFO or CEO who is a supporter of procurement is replaced by someone who is not.

So both as a profession and as individuals we have to keep on explaining, keep on promoting and working to demonstrate the value procurement can bring. We have to be flexible and respond to corporate changes; that little acquisition we’ve just made might turn out to be the biggest part of the business in five years’ time. So get in there and explain to its CEO why she or he needs a procurement manager on board now!

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Voices (3)

  1. bitter and twisted:

    Halo effect. Companies appear to be great based on the big strategical decisions paying off / luck. Then this success makes the individual departments seem excellent.

  2. Lalit K.Dhamija:

    It is unacceptable and undesirable but true, if a leader or an advocate of procurement in an organization leaves the profile of P&S comes down or at the best status quo remains.
    We should aim for robust Procurement Framework and Procurement Excellence model that not only sustains but mushrooms, even when originators , facilitators & supporters leave.

    1. David:

      Great article Peter. Straight to point and couldn’t agree more. After 20 years in this game starting out at BT, then working in Ireland, Australia, Philippines, Netherlands and Canada. I’ve given up trying to do advocate best-in-class procurement. I’ve realised that it pays better to tick the boxes, process the PO, as CFO or CEO do not give a s**t about category mgt. We are like human resources, procurement is only there as corporate governance to appease regulator

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