Procurement transformation and a New Year’s resolution for 2014 – be pragmatic

We're delighted to introduce the first of a series of articles by Ian George that will focus on the transformation of procurement as a source of competitive advantage.

Ian has an engineering background and is a senior partner and practicing consultant at Agile Partners, having worked in procurement for the last 20 years. He has held senior positions in BMW Group and Philips Electronics, working globally on organisational and leadership development.

He has a PhD which focused on Procurement Leadership and Transformation, and is adept at turning theory into practice. The series is intended to walk through the lifecycle of a transformation programme, highlighting the key issues and how they might be addressed. Ian has a refreshing no nonsense approach to the topic - always asking the four key questions: Where are we? Where do we need to be? How are we going to get there? Is the investment worth the payback? (The Editor)

At the start of a new year we can get rushed along with the euphoria of newness and fresh starts. We propose resolutions that are rarely kept and we imagine great achievements that don’t reflect our recent history. Business is very much the same. Stretch targets are rolled out – sometimes with little relation to what had previously been agreed, and the mantra of doing yet more with even less is repeated as if it were just for one more year – the consequence of someone else off-loading their desire for great achievement.

Procurement is adept at negotiating with suppliers, perhaps it should try to do the same with its own task masters? Agreeing the critical few priorities is a good start. Not only does this bring clarity, it also allows the function to state what it won’t do this year. A tough call for some – and if they still want it then the negotiations can restart for the necessary resources.

Along with wanting more, the term transformation is likely to be bandied about whether it means incremental improvements or a step change of significant proportions. Whilst the desire is often for the latter the pragmatist would always advocate the former, given the choice. Changing the way an organisation and its people work is tough; they don’t like it and often won’t thank you for it even if it goes well.

Delivering a new set of (stretch) targets should always be about working differently, if the intention is to keep delivering more each year. Simply working and squeezing harder is not a sustainable proposition and often leads to an eventual seismic shock as the pressure becomes too much. The results achieved are a consequence of inputs and what you do with them. If you keep doing the same thing, however hard you do it, you are likely to keep getting the same results (ask Einstein).

Change the inputs (where and what you start with in the organisational processes) and how you work with them (your own processes integrated with those of other functions) and the results will be transformational. A critical few priorities mean manageably few changes of significance need to be undertaken. Not only will this get the process of delivery running sooner, it is less likely to bring with it an unmanageable burden of unforeseen consequences.

If there were a key message for procurement leaders in 2014 it is that doing procurement and improving the way procurement is done are two very different skill sets. When asked “How long does it take to change an organisation?” The Americans said “A long time, about ten years.” When asked the same question, the Japanese said “Not very long, about ten years.”

To become proficient in procurement or improvement takes about ten years - lots of research in different fields of endeavour keep coming up with this same conclusion. As long as you know your strengths and weaknesses, you can reach out for support in the areas where your organisation needs help. But, when you do, demand of those that help you that they teach you how they do what they do. If they are any good, in ten years from now, when you can do it too, they will be ready with the next generation of support you need.

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