Procurement transformation has become a familiar topic here on CPO Rising, particularly over the past couple of years when it has become increasingly clear that what got procurement departments where they are may not get them where they need to go. Ardent Partners believes that Chief Procurement Officers (CPOs) and other procurement leaders need to foster innovation at multiple levels in order to elevate the procurement organization and the enterprise as a whole to the next level of performance. Put another way, procurement transformation cannot and should not be attributed to any one particular factor; people, processes, technologies, stakeholder relationships, and knowledge management each need to be regarded as causal – and instrumental, really – in driving forward procurement transformation within an enterprise.
Each of these variables is significant in their own right, and their importance should not be understated. That is why procurement transformation needs to be broad-based – it needs to account for each of these aspects in order for a lasting and successful transformation to take root within an organization. Thus, this new series will examine each facet of procurement transformation in greater detail, and shed further light on what CPOs and their teams need to do to successfully implement a holistic procurement transformation project. Read last week’s series introduction by clicking here. Today’s installment will focus on the staff or talent aspects needed to get this project off on the right foot.
How to Transform Procurement in Five Steps – Step One: People
For (too) many years, procurement organizations as a whole and procurement staff in particular were relegated to back offices, regarded as mere order takers for the rest of the enterprise, and forced to be reactive. Stakeholders from across the enterprise would call in and request goods or services to fulfill a given business need, whether it was a direct need such as a component for a product, or an indirect need such as office supplies or business travel. Rarely was there a discussion of whether they were sourcing from competitive or strategic suppliers, and if they could do better. Procurement staff were often seen not as valuable partners and value drivers, but as reactive instruments, and as a result, they often did not make much of an impact. However, the dynamics and expectations are starting to change, necessitating changes at the staff and talent level.
Transforming procurement staff from reactive order takers to proactive value drivers can often be the most challenging part of a total procurement transformation project because CPOs and business leaders have to change the culture and caliber of their staff in order to make progress. In order to do that, they have to conduct a capabilities assessment:
- Do they have the right mix of people and talent in place to transform?
- Are they top-heavy with experience and people skills, but lacking in innovation and technical skills?
- Do they need to hire more out-of-the-box thinkers and or tech-savvy Millennials?
- Can they provide training necessary to bridge skills gaps?
- Could Baby Boomers and Millennials train each other?
CPOs then have to conduct a scope of operations assessment – what are the parts of the enterprise where they currently manage spend, where else are they being pulled into, and where would they like to converge next? CPOs then have to bring their capabilities and scope of operations into their plan to ensure that the mix of skills and talent that they have or plan to have will adequately support the procurement department’s and enterprise’s needs, particularly if they plan to converge or influence across the enterprise.
Conclusion
Moving from a reactive and sedentary procurement culture to one that is proactive and fluid can allow procurement teams of all shapes and sizes to realize their full potential and drive more value to the enterprise. But CPOs and procurement teams have to walk before they can run; they need to take stock of their current staff and skills, if and how they will support their plans for the future, and how they plan to get there from here.
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