Six pieces to the procurement puzzle
I have been involved in many procurement projects and heard many different methods of mastering spend control. The best advice I have always remembered and still find relevant is to consider the procurement puzzle as having six pieces: people, vision, process, roadmap, product and change. Being aware of these elements and discussing how they fit together will go a long way toward creating a procurement environment that supports your efforts to master spend control and provides both financial and non-financial benefits to your business.
The people that are involved in implementing a new procurement system cannot be from the finance department or the procurement department alone. Procurement is an organisation-wide responsibility, hence why the diversity of people is important. As with all winning teams, the team needs structure and leadership. The team needs to have the confidence to break with the status quo and challenge the norm. Excellence does not come from doing what you have always done faster. Change has to happen and be embraced if the project is to be a success. Ask yourself about the impact of external consultants, also. What interest do they have after the project?
When coming up with the vision for your procurement project, it needs to be something that is digestible and repeatable by the entire organisation and one that you would be willing for suppliers to know about. The vision needs to inspire and not be conservative. Go for the big results and face the reality of the challenge of achieving them. The vision does not need to come from a highly analytical review of procurement. The vision should be easily discussed around the organisation and be motivating. Involving the process owners in formulating the vision will support a wider desire and focus to crystallise the vision.
Knowing the current processes and their ownership is important for continuous improvement and monitoring. Having the description of the processes is enough. Group the processes into non-changeable and flexible. The processes that are non-changeable should only be based on fact and influenced by some form of compliance or regulation and not the opinions of people who prefer the old processes. Making a manual process digital does not mean it has improved. Consider what is important for the process as a business outcome. This will help in prioritising the areas for improvement. All processes need to be challenged systematically and reviewed continuously during the project. The process owners need to be a part of the conversation and responsible for the updates. Ensure sufficient time and resource is allocated to process review.
It sounds obvious but a roadmap with an efficient route is an important start. As for all routes, you need to be mindful of the speed and the conditions you wish to travel in. Consider alternate routes but regularly check that everyone is trying to get to the same destination, do not be concerned with how they got there just as long as you get everyone there. Expect bottlenecks, congestion and all kinds of roadblocks, if a faster route is more expensive then take it. Spending a little bit more in the short term can provide long term benefits. Occasionally check on the road from a higher view every once in a while to make sure you have that big picture.
Choosing a product is sometimes treated as the first objective for a successful procurement framework. It is important, sure. You do need to choose the right tool for the right outcome. Keep the decision process simple and ensure that the solution can manage your core vision and processes effectively first. The product must be able to be managed internally so that you can update and configure as you constantly strive for improvement to procurement. Have a focus on eliminating administration. Support and knowledge of the product has to be appropriate for both internal and external people. Check that the product has a future plan for development and that there is a wider user community for you to access.
Change is inevitable and needs to be embraced. Provide a support network and nurturing for team members to be able to embrace the changes and provide a secondary support for people to cope with change across the organisation. Consider that most team members may never have done a procurement project. Mentoring on how to manage change and be innovative is important for developing core competency across your team.
Enjoy putting the puzzle together. It is worth it.
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