Tactical to Strategic: Four Questions to Kickstart your Procurement Evolution
As the function of Procurement changes, evolution is inevitable – we teamed up with Proactis to map out how it can happen
Gone are the days where executives viewed procurement as a tactical exercise of securing goods and services at the lowest possible cost. Instead, today’s procurement teams are tasked with more strategic objectives such as: building resilience, sparking innovation, increasing efficiencies, and driving greater business performance.
If your team isn’t yet operating at this level, take the time to ask yourself why, and identify what needs to happen to get on this path.
“The urgency to evolve is continually increasing,” said Tania Seary, Procurious Founder & CEO. “Given everything happening in the market today, procurement teams have two choices: evolve and progress or succumb to today’s volatile market.”
Below are some key things to consider before embarking on a journey of procurement evolution.
1. What’s the current state of your procurement operations?
The first step is to self-assess. How urgently do you need to evolve and elevate your procurement function? Do you really need a full digital transformation or is taking a more modular approach to transformation more appropriate for your organisation? If you’re currently experiencing any of the following, it’s an indication that you need to start considering the evolution of your procurement function:
- Lack of transparency and understanding of supply chain risk and resilience
- Contracts auto-renewing and no clear agreements with suppliers
- Lack of capacity to support new challenges and opportunities around resilience and ESG
- No efficient way of seeing spend against agreed contracts
- No or low levels of electronic upfront ordering
- Long-tail of suppliers
- High levels of maverick spend.
“Most procurement organisations struggle with at least a few of these items,” said Ashley O’Neill1 , UK Head of Marketing. “The important thing is to understand where you are today and what you need to change to improve.”
In addition to assessing your functional performance, you’ll also need to consider what gaps exist internally that could hinder your journey. Are your executives and users on board with change? Do you have the time, technology and resources needed to be successful?
When going through the self-assessment process, be sure to look outside your own organisation and to your peers for perspective on how others tackle common challenges. Going at it alone and overlooking industry best practises will make your journey harder and longer.
2. Where do you want your procurement operations to be 12 months from now?
Start your journey by mapping out your ideal future state and all the steps it will take to get there. Take a look outside your organisation to see how the others in your market operate. This will help you create a realistic vision for what’s possible and validate your strategy.
Then, to get started, identify the most pressing issues and opportunities that will deliver quick wins.
“What can you do today that will deliver value and win favour internally?” questioned Ashley O’Neill.2 “Consider what your organisation is struggling with right now – supply disruptions, inflation, cost pressures, etc. Delivering incremental gains on these items, even if they are small, is a sure-fire way to build support internally and start your journey on the right foot.”
3. What obstacles will you need to overcome along the way?
As you embark on this journey, you’ll encounter new hurdles each week. But if your team is committed to evolution, there will always be solutions and by working in partnership with a dedicated procurement technology provider, you should be able to work to overcome any difficulties by leaning on their expertise when needed.
Create a gameplan that helps identify and mitigate the impact of macro events – like inflation, a potential recession and geopolitical conflict – from the get-go. You also need a plan for overcoming internal obstacles, like budget cuts, lack of stakeholder buy-in, and user adoption challenges.
“We all know the best laid plans don’t always stay on track. One of the main reasons we hear around why companies are looking to change is to increase agility. Procurement leaders should take the same mindset internally – prepare to be disrupted and have a plan in place that allows you to shift and continue forward regardless of what is thrown your way,” said Ashley O’Neill3 .
4. How will you measure success?
Finally, determine how you will measure success. Developing targets both makes it easier to win support from key stakeholders at the outset and prove the success of your project at key milestones.
Think big here – while there are many improvements you can and will make along the way, the real potential lies with procurement influencing the strategic health of your organisation.
Will it be the speed at which your procurement team responds to changing market conditions? The implementation of strategic objectives like sustainability, social impact, and innovation? Measurable impact on bottom-line performance?
Whatever your end goals, knowing how you will measure ROI upfront will create a clearer path for your procurement team to take the next step.
Once you’ve considered the above and built a plan around them, you’re ready to begin your journey. Just remember, incremental improvement is crucial to successful procurement evolution.
Looking to go deeper? Procurious and Proactis combined our brain power to create a step-by-step guide to help you reimagine your procurement operations. Check out the report here: The New Dawn of Procurement | Reimagining procurement, one step at a time.
1. Quote attributed to Ashley.
2. Quote attributed to Ashley.
3. Quote attributed to Ashley.