‘Will somebody please tell me what Procurement Transformation is?!’ Don’t overthink it…
My dad and I were enjoying a beer during a rare moment of silence one Sunday afternoon earlier this summer after I finally got both of my kids down for a nap at my parents’ house. We both had our feet up on the extra stools around the patio table while the breeze blew cool as if to grant us one last reprieve before the temperature literally shot up 22 degrees 24 hours later to unofficially mark the beginning of summer in Western Pennsylvania. After a few minutes, I broke the welcomed respite by diving into a narcissistic diatribe (with maybe a small dose of self-pity) on how parenting is so hard and why it’s different specifically for me to be a father to this generation.
“Dad, you can’t imagine how difficult it is to raise two small kids to be well-mannered, non-whiny, unentitled, successful adults in today’s world where social media posts constantly remind you of the 150,000 things you shouldn’t be feeding to/depriving of/gifting to/etc. your kids. And then adding on trying to balance your marriage while both parents work, and find a happy medium on financial decisions, all while loading the dishwasher, cycling through loads of laundry and cooking a sensible meal that everyone will eat…and don’t even get me started on the kids’ bedtime routines!”
My parents have ironically dubbed their patio “The Knowledge Center” being that it’s the central hub for solving the world’s most divisive challenges while imbibing with friends and family. On this particular day, in that exact moment, The Knowledge Center was about to live up to its name.
While uncharacteristic of my dad, he sat quietly and let me finish, but then sternly replied (as he often does when my brother and I overcomplicate things), “Let it go, dude! This ain’t rocket science!” His tough-love stance was a good swift kick in the ass that I have come to expect. What he was saying and what he later went on to describe in more detail is that I don’t have to have all of the answers right this very minute. As long as I’m following some sound, high-level guiding principles built upon a proper foundation (AKA his and my mom’s parenting), the problems will work themselves out as they have for years, or the solutions will reveal themselves in due time. It’s a journey that people in similar situations must take in order for their seeds to bear fruit.
So, what does any of this have to do with clarifying what Procurement Transformation is? You’re likely asking yourself this very question…and I’m glad. First of all, it’s imperative to understand what that phrase even means. Procurement Transformation is a journey by which an organization strives to go from a lesser, more tactical point of maturity, to a long-term, improved, strategic point of maturity. It’s a proper metamorphosis accomplished by laying out the following foundational elements:
- Performing an assessment across your people, process and technology
- Aligning procurement’s goals with the broader business goals
- Planning based on the output of the assessment(s) and the capacity of your team
- Developing an exceptional change management plan coupled with executive buy-in
- Creating a strong governance program committed to success post-implementation
My dad’s simple formula for success isn’t just for frustrated parents. It aptly applies to most things in life, including Procurement Transformation (although arguably in the cases of parenting and procurement we’re both trying to do more with less).
Let it go, dude!
If you’re like me, when the task seems overwhelming and frustrating you tend to procrastinate or pile on all the reasons why your goals can’t be realized due to the obstacles that stand in the way. The task at hand is too difficult. You don’t have enough head count, your team’s capacity is limited, the capabilities of the team you inherited are sub-par, you don’t have the right technology in place, stakeholders bypass the policy/process, etc. These are all common challenges that Procurement teams face but, in several scenarios just like yours, Procurement has succeeded despite those challenges.
One of the most common reasons for failure is that Procurement organizations attempt Procurement Transformation in a vacuum. Leadership believes that Procurement can deliver on successful change by ‘building’ a solution from scratch. In these cases, Procurement lacks benchmark studies, tools and templates, subject matter expertise, bandwidth and/or the proper skillset to pull off the Transformation. The business should always consider partnering with an experienced provider whose offerings and culture are the right fit.
It’s not rocket science!
While Procurement Transformation can feel like a major overhaul, you don’t have to overcomplicate it. The idea is to do your homework. Create a well-informed plan then execute on that plan. Take advantage of the talent that’s available to you either within the Procurement organization or identify resources that can span multiple teams and recruit them for special projects. Where you see gaps, leverage a partner or multiple partners that may bring experience from other industries and can offer a fresh perspective, but also have a proven track record for successful transformation.
Often times partners can introduce additional partnerships that add value across the 9 Dynamics of Transformation, specifically in the areas of technology and automation. The most effective way to leverage a partner/provider, however, is to involve them early on in the planning stages of Transformation. Then jointly determine an execution strategy where the partner enables you to perform as much of the work as you’re willing and able to accomplish and allow them to carry the baton as needed.
In today’s business world where a 2.5% savings equates to a 10% increase in sales*, Procurement is only becoming more and more instrumental strategically with a company’s success. Procurement Transformation is not only inevitable, it’s crucial to a positive EBITDA. Don’t discount the effect that your Transformation will have on the future of the entire organization, but don’t get bogged down either. Trust yourself to know when and where to rely on the help of a partner and allow that partner to make you the proud parent of your successful Procurement Transformation.
*Footnote: *Managing Price, Gaining Profit, Mike Mam and Robert Rosiello; Harvard Business Review, 1992.