Moving from a tactical to a strategic procurement function
Does your typical day in procurement look anything like this?
- Under pressure to conduct tenders at short notice.
- Feel that you are involved too late on in the decision making process.
- Procurement decisions are inconsistent in approach across the team.
- Little time available to think about Supplier performance.
- No tools to assess and manage spend.
- Unable to access reliable data easily to help you do your job.
If you recognise any of the above then you’re not alone. In this year’s Procurement Trends Survey by Science Warehouse, 25% of procurement professionals identified moving from a tactical to a strategic function as the biggest challenge for 2016. Evidently, in the ideal world, your typical day in procurement should look more like this:
- Regular, planned and diarised reviews of sourcing options, all proactively organised by procurement.
- Regular, planned and formal reviews of contracts, KPIs and SLAs.
- Spend managed by category.
- Visibility of spend information at category and Supplier levels.
- Ability to scrutinise spend and make informed sourcing decisions.
- Unified technology to conduct eProcurement.
- Clear performance measures.
Sounds great doesn’t it? But in reality how can you make such a big leap from a tactical to a strategic procurement function?
Essentially, you need to recognise that this is a business change project that you are embarking on. The barriers preventing you from making the step change can be broken down by reviewing your people, processes and technology in a structured approach. You need to understand where the gaps are first before you plan in the changes needed to get you to your desired position.
People are at the heart of any thriving business. What should you be looking for to help assess the gap between where you are now and where you need to be?
- First, ask yourself the question, ‘Do you have the right people to support strategic procurement?’ It’s a hard decision but often procurement departments have grown organically and you may not always have the right people for the roles.
- Are your people well trained? Do they have any professional procurement qualifications to help support them in their role? If not, then it’s something you should seriously consider.
- Are you well resourced? If not, is that because the team are spending time on tasks that don’t add value and could be removed or improved?
Process maturity is a critical part of moving into strategic procurement. You should review the following factors to help determine any major gaps:
- Rate your processes against where you are now versus where you want to be in the future. This will give you a clear view of the gaps which need addressing.
- Who knows about your processes? Ensure they are communicated well to key stakeholders.
- Do you have process owners who are responsible for keeping your processes up to date and communicated? This will help with developing your processes and communicating them.
- Survey your key stakeholders – you can gain a lot of insight from external perspectives.
Technology can be a minefield; a common mistake is to decide on the technology you need before you understand the people and process part. If you want to work strategically, first you need to have a clear view of the future processes which will underpin the technology. eProcurement is a great enabler to help streamline your processes, reduce manual overheads and ultimately become strategic. Reviewing the following will help in the decision making process:
- Understand which processes you feel will benefit from eProcurement e.g. high volume low cost spend could benefit from an eCatalogue.
- Do you have a clear view of expected return on investment? Headcount savings, price reductions and achieving budget targets all need to be included in your business case.
- Do you have finance and senior stakeholder buy-in to the investment?
- Engage IT early on for their views around integration options.
So, as you can see, there is a lot to do – you need to be realistic about what is achievable. To sum up:
- Understand what your vision of strategic procurement looks like.
- Assess your current state by reviewing people, processes and technology.
- Prioritise and take action on the gaps identified between your desired state and current state.
You may not become strategic overnight but significant progression is possible if you take a strategic approach to becoming strategic. Good luck along the way!