Earlier this past summer, I published a research series on Procurement Transformation to help procurement organizations design, plan, build and execute a proper procurement transformation program and utilize leading-edge strategies to broaden their scope of influence and deliver greater value to the enterprise.
The first report, Designing a Procurement Transformation for Best-in-Class Performance, which is available by clicking that link (registration required) discusses the importance of having the right plan or blueprint to drive the initiative and the right architecture to support it. If this is starting to sound similar to what you do when you build a house or a structure, you’re not too far off. There’s more to it than just those two components, but there are the two keys at the start.
The Blueprint
The procurement landscape is littered with hundreds of oversold and overhyped solutions and strategies that promised a revolution or paradigm shift but failed to deliver. The reality is that the procurement organizations that are the most likely to succeed are the ones who take control of their own destinies and drive change from within the department. In that sense, “procurement transformation” has become a common theme for many Chief Procurement Officers (CPOs) and other procurement leaders who are searching for an advantage in an increasingly competitive and complex business marketplace. So, what’s the best way to accomplish a transformation that effectively overhauls critical spend management processes and drives procurement into the forefront of strategic corporate importance? The short answer is that while a successful transformation program can take many forms, its design should be built using several key principles. A few of the series highlighted in the report include:
Take a holistic view of the source-to-settle process – While the source-to-settle process cuts across different departments, the process itself represents a single supplier transaction or relationship and should include a series of activities and tasks that link to and build upon each other
Aggressively leverage process automation – While technology can be an enabler of success, its contribution to the rapid rise of the procurement function over the past fifteen years cannot be understated.
Have the right marketing and execution plans and the standing to drive widespread adoption – As Peter Drucker once said, “Plans are only good intentions unless they immediately degenerate into hard work.” A procurement transformation is a major change management initiative and one that will be met with significant resistance if the plan to drive adoption is lacking.
The Architecture
Where a transformation program begins will depend upon the unique current state of procurement operations and enterprise priorities. For example, the transformation may need to be “self-funding” which may lead procurement groups to start with an eSourcing solution to drive savings which can then be funneled back to fund the ongoing program or a department may be lacking in talent and in dire need of a mechanism to drive compliance and gain the attention of the enterprise which may lead them to begin with eProcurement which can drive great value while helping to address those needs. Or, the enterprise may have experienced a supply disruption or an erosion in quality which may drive a procurement department to begin its transformation with supplier management systems and programs. While there is no single plan to achieve Best-in-Class performance, the archetypal transformation program should ultimately grow to include a collection of solution – here are a few that are mentioned in the report.
Spend Analysis – The visibility into a variety of source-to-settle aspects, among them spend, suppliers, and process, that results from a spend analysis effort remains a critical step in driving a successful procurement transformation.
eSourcing – Strategic sourcing is a primary driver of savings for most procurement departments. Since savings remains the top procurement performance metric, the investment in tools and resources that can improve the team’s capabilities and process (and thereby improve results) makes great sense.
Procurement Performance and Financial Savings Management – For a procurement department to truly rise within the enterprise, its successes must be understood and validated by top executives and key stakeholders.
Ultimately, enterprises that craft the right blueprint and establish the right foundation increase the speed and impact of a procurement transformation.
Those of you thinking about a transformation or pushing ahead in the midst of one should have great interest in the report; actually so, will all those professionals who can see themselves one day leading the charge in their next role more senior role.
Click the link (reg. required) to read Designing a Procurement Transformation for Best-in-Class Performance, brought to you by Zycus.
