Peter Drucker said the difference between management and leadership is “doing things right” (i.e., management) and “doing the right things” (i.e., leadership). The procurement profession needs more and stronger leadership. Today, 26% of CPOs have their teams working on the right things, with strategic plans that are “tightly-aligned” with larger business objectives. And while another 52% are “generally aligned,” many procurement organizations have room for improvement which is problematic for many reasons. In today’s highly competitive market environment, resources must be allocated to optimize their impact; a majority of procurement teams fail this test.
The organizations that know that they are more focused on their own goals than what is important to executives should convene their leadership team and immediately redesign their current plan. The groups that lend some support to the business but are, nonetheless, focused on procurement’s plan over most other things, should schedule a series of meetings with business stakeholders and executives and build a list of projects that could use procurement’s support and reallocate resources accordingly.
The opportunities for these groups may be as simple as focusing the sourcing team on a different set of categories or providing resources to support a product team that is struggling with design and cost issues under a tight deadline. Procurement may be able to leverage its relationships with global suppliers in support of the team responsible for the launch into a new region or country. Treasury and finance could have pressing concerns that cash flow levels may trigger certain debt provisions that could be eased via supplier payment term renegotiations. The list of possible areas that procurement could support this year is immense.
To perform at a consistently high-level, the need to continuously monitor and assess key procurement activities and results is absolutely crucial in adapting to evolving market conditions. In 2021, 48% of all CPOs and procurement teams assess and adjust their strategies regarding team and department management on a quarterly basis; 35% of CPOs do this on a biannual basis, according to this research study. True agility requires continuous monitoring, reassessment, and the adjustment of strategies and approaches.
At the end of the day, becoming a high-performing procurement function does not simply entail a smart strategy and tight execution, it must comprehensively incorporate the needs, requirements, and perspectives of its key stakeholders into its actions to optimize its impact and maximize results.
If you are interested in learning more about the key procurement and CPO data collected in our annual research study, consider listening to Ardent’s brand new “Procurement Rising” podcast series. Click below to listen to new episodes. The podcast is also available on Apple, Spotify, Stitcher, Google, or wherever you get your podcasts.
