The interesting angle to navigating change is how exactly Chief Procurement Officers (CPOs) and their teams react to it; in an age when “agility” has become a desired status for all businesses, many of the top strategies listed below revolve around the dynamic steps that enterprises can take in order to balance, navigate, and manage the change brought about by business expansion, contraction, globalization, and increasing complexity (like protectionism):
- Getting the “core” aligned is perhaps the most critical strategy for procurement. The “core” of every procurement function must maintain a true alignment with business’s overall processes and its goals. If procurement has had a consistent level of impact in the years prior to change and growth, then it is absolutely crucial that the same core of the function (principles, processes, solutions, leaders, etc.) is centered and moving forward regardless of the “shakeup” brought about by global change. Consistency becomes vital while the ability to scale the core becomes critical.
- The right people with the right talent = the right approach. “Talent” may be an aspect of the HR group, but it cannot be understated from procurement’s perspective. As globalization takes hold, and internal and external complexities grip the modern business, the procurement function will require talented staff that are well-versed in technology, able to adapt quickly and adeptly, and understand the ramifications of global change on the operation.
- Business growth requires strategies and capabilities that are scalable. Regardless of its source, enterprise growth can cause a variety of pain-points. Strategies and processes that worked well in the past may not have the strength to continue to impact the entire organization as it expands its workforce, systems, and programs. Growth environments force the CPO and its team to develop or enhance its capabilities (particularly in regards to reporting/analytics and spend management) so that they can be applicable in a new environment. The proper “mapping” of these competencies is also important; if today’s capabilities do not have the power to adapt to a changing environment, procurement must not only understand the short-term implications of the shortfall, but also have an intelligent plan for expanding these capabilities so that they can meet the new and dynamic needs of the changing organization.
- A proper plan for technology integration is key. Perhaps the most underestimated aspect of a merger or acquisition is its impact on enterprise technology. With the way automation penetrates both the tactical and strategic attributes of the modern business, it is critical to understand the impact on how systems will run, how their “reach” will be affected, and the availability of information from these sources. As with the “talent”-oriented strategy mentioned previously, the business must employ and rely upon well-trained individuals that can properly map how systems can and should be integrated, and how short-term gaps can be addressed. It is critical that procurement executives take the necessary steps to ensure that the software attributes of yesterday (especially the ones that were effective) are well-integrated in newly-merged solutions and systems.
- At the end of the day, “intelligence” is king. The “agile” business is one that can react to dynamic corporate challenges in an efficient and effective manner. In today’s fast-paced, globalized world, agility is quality that every procurement operation should pursue. The path to agility is paved with intelligence. As global change envelops the modern business, procurement is in a position to adapt to this change by utilizing its access to real-time data and insights, which can be transformed into actionable intelligence. From understanding the impact of new suppliers in its network to analyzing the soon-to-be integration of core systems, today’s procurement functions must ensure that they are not only prioritizing intelligence as the foundation of strategy, but also utilizing that information to execute on strategies that can best shield the greater organization from adverse ramifications of global business change.
- Combating complexity is as simple as…prioritizing the alignment of technology, systems and processes and continually optimizing it. Technology truly is the underpinning source of balance in the face of change. Additional units? More employees? Restructuring of core purchasing processes? These are all growth-related challenges that can be solved by centralized process automation, which can be repeatable and useful for both old and new functions alike. Also, it is incumbent on procurement to train, educate and speak to the importance of leveraging aligned technology as the greater organization continues to grow and expand.
Final Thoughts
In today’s fast-paced, ever-evolving business world, there are elements of change that can affect procurement’s overall impact. The issues of growth, globalization, and complexity, which generally fall outside of the CPO’s control, can alter procurement operations now and well into the future. As such, procurement functions must be prepared to adapt to growth (by market demand, corporate expansion, M&A activity, or organic), contraction, globalization, protectionism, and complexity (solution integration, altered data sources, etc.) in order to maintain their strategic influence. The health of the greater enterprise relies upon them.
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