At several of the events that I have spoken at in April and May, my presentation theme has paralleled one of the 10 or 2010 articles written to kick off the year, “Ideas for the New Year.” For those of you that are new to CPO Rising, I highly recommend that you investigate the 10 for 2010 series by clicking here because 1. I think it provides a good flavor of what we are seeking to accomplish at the site and 2. Who doesn’t love lists?
Today we will focus on one of the ideas or strategies to drive value this year and this decade: Embedding procurement staff in the business. Next week, we’ll present a case study of how one leading CPO and friend of the site is doing this with his staff today. The idea:
Work to embed your staff with line of business operations. 2010 [and this decade] will be another year where budget overruns will not be tolerated and your department can help the different P&L owners hit their numbers. Seek out the budget-holders, engage in proactive planning discussions, and formalize the level of interaction for 2010 and beyond.
Sebastian Junger, who is perhaps best known for contributing the term ‘Perfect Storm’ to the global lexicon, just published a book War. (Sidebar: A Perfect Storm, perhaps one of the few terms more overused than ‘Doing More with Less,’ provides ‘analysts,’ journalists, and talking heads, who missed some big trend or event with an excuse for their oversight by simply citing three somewhat independent factors as coincidence and calling it a perfect storm – we forgive you Sebastian).
As its title suggests, War is about just that: war, the Afghanistan War, specifically and told in a first-hand account by Junger, who made five trips to Afghanistan’s Korengal Valley in 2007 and 2008 as an embedded journalist with the 2nd Platoon, Battle Company, a part of the US Army’s 173rd Airborne Brigade, during the course of their 15-month deployment. While I have not read the book (it is next on my list, perhaps my first eBook) the reviews are in and they’re rave. Certainly the book benefits from an excellent writing style and a compelling topic, but what separates this book from other war ‘stories’ is the first-hand nature in which it is told. War is hellish – horrible and tragic and provocative and emboldening and many, many other things. To many of us (and in many ways), it remains an abstraction, something we can imagine but cannot know. When seen up close and through the eyes of real-life heroes, it becomes more real, more horrible, more tragic, more emboldening, etc. It becomes tangible.
For sourcing and procurement ‘lifers,’ operations outside the department can be foreign and daunting and abstract. Even if you’ve joined procurement from the business, it can be all of these things. Yet, when you actually sit in staff meetings and planning sessions, when you are an active participant in the budgeting process, when you understand the objectives and priorities of the business and when you understand how the business rewards its staff, you develop a much better understanding of the business’ needs and how to support them. Operationally and collectively, cross-functional teams begin to understand and focus on the needs and goals of the overall enterprise and not those of the departments within them. Additionally, after working side-by-side with the business professionals on key operational projects, sourcing/procurement pros gain credibility. And credibility, for many procurement teams, is much needed.
A point of clarification: when I use the word embed in the procurement context; I am not suggesting some type of decentralized procurement operations. No, I strongly prefer centralized (or center-led) management for most enterprises (As a first step anyway, note the comments section in this article about ultimately taking a category-led approach – we’ll come back to that later). By embedding, I mean sending staff into the field for a period of time to engage and work side-by-side with the key business stakeholders whose spend you want to manage.
To be certain, just as embedding oneself with a platoon involves risk, serious risk (ask Bob Woodruff), so does sending your staff out into the ‘line of fire’ of the business. But remember, you are also sending them out into the ‘line of fire’ with the business. Much as the ‘new normal’ world gives cause for rewards when procurement delivers, this business environment leaves little margin for error. Budget overruns cannot be hidden and will not be tolerated – the business is more exposed to this now than in recent years and needs support.
Yet, embedding procurement in the business is by no means a strategy that yields overnight results. It takes time to build relationships and understanding and trust. Again, Junger’s example is analogous: After actively trying to avoid Junger for the first months, George Santana Rueda a 23-year old member of the platoon realized, “I guess it was when he got blown up by the IED [Junger was in an armored vehicle that ran over an improvised explosive device] that we realized he really wanted to be there, that he was going through the same things we were, and we accepted him and decided we could teach him what we knew.” Alignment and friendship bonded in battle, bonded by battle scars and joint sacrifice. Different constituents now united in a common fight and thriving in a communal atmosphere. Now substitute “war” with “spend or supply management.” Big upside. Huge upside. Yes, there are risks to attempting this strategy, but I think the bigger risk is not trying it.
We will pick this topic up again next week, focusing on one procurement general’s approach. Until then, what do you think? Take a risk! Embed a comment below.
Tagged in: Chief Procurement Officer, Collaboration, CPO, People, Spend Under Management, Strategy
