Editor’s Note: Over the next few weeks on CPO Rising, we’re publishing some “best of” 2021 articles as we reflect on the year and prepare for the new year ahead.
One of the challenges to studying a phenomenon (also known as a dependent variable) is to forego assigning causation to a single independent variable without considering other potential variables and how they may be contributing to the event. After all, events do not happen in a vacuum, and independent variables are not mutually exclusive. Independent Variables 1, 2, and 3 may be acting in concert to produce Dependent Variable 1. And the degree to which each is causal can also be difficult to discern. Statistical analyses, like regression analysis, can isolate each variable’s causation to a high level of confidence and shed much light on these kinds of relationships. That’s all well and good in data-driven analysis, but qualitative studies can be less definitive. And what does this have to do with procurement, anyway? Good question.
Like the aforementioned example, procurement transformation cannot and should not be attributed to any one particular variable. Procurement 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.
For starters, a procurement organization that is viewed as a group of glorified order-takers cannot be expected to implement standardized, interrelated, and automated processes using the latest and greatest technology solutions. And they probably cannot be expected to confidently and persuasively engage either internal or external stakeholders, win their trust and buy-in, and manage multiple streams of data and information that pour into the modern organization. These are all desired end states in themselves, but a procurement staff that is not set up for success will likely tumble in a mad dash towards procurement transformation. However, that same organization, infused with fresh talent and adequate training, and empowered by their Chief Procurement Officers (CPOs) or other senior business leaders to elevate their standing within the enterprise, will fair better in the short and long term.
Procurement transformation also needs to be implemented with the end goal in mind – that is, when CPOs embark upon a transformation project, they do so with a desired outcome rather than an endless and pointless excursion into failed process improvements and technology adoption. All too often, processes are re-engineered but do not reflect the realities “on the ground,” such that when they are implemented, end users find them unwieldy and unworkable. In turn, they simplify the processes to the point where they are over-simplified and fail. The problem is amplified when end users attempt to mate process improvements and standardization with technology solutions. If processes are not aligned with the technologies, or the technologies inadequately implement the processes, breakdowns can occur and end users will abandon the new processes and technologies in favor of old ones, bringing procurement transformation to a deafening halt.
With these pitfalls in mind, this new series will examine each facet of procurement transformation in greater detail, and shed further light on what CPOs and their procurement teams need to do to successfully implement a holistic procurement transformation project.
