The Transformation of Procurement

“These are my principles. And if you don’t like them… well, I have others.”

~ Groucho Marx

Transforming its approach to Procurement can be one of the most beneficial things an organisation will ever do. Savings that deliver straight to the bottom line, greater alignment with overall strategy, improved service internally and externally, the list goes on.

Trouble is, you’ve got a business* to run, and targets to hit. I’ve seen a number of organisations setting out with grand plans, that have had to be watered down or shelved due to a focus on short-medium term gains. Maybe the financial climate changed making cost-out more urgent, maybe the organisation just wasn’t ready for the kind of programme that true transformation entails. The principles of the programme change, targets get missed.

Clearly there is a very strong link between transformation and benefits delivery, otherwise there would be no point. But a ‘show me the money’ approach can affect or even derail true transformation at strategy and category level:

  • Strategy level – Transformation needs investment in operating model design, recruiting/training the organisation that’s needed to deliver it, process change, toolkit development, change management, communications, etc. etc. If this investment isn’t there, change won’t be embedded and even those precious quick wins can dissipate very quickly.

 

  • Category level – There are a huge number of ways of generating cash savings and other benefits in any given area of spend (see FP’s Value Levers here). Lack of capability and capacity often limits organisations to the tactical ones that are aimed solely at getting a better price from suppliers, where the gains are less attractive.Learn More

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