The early part of each new year brings with it an opportunity for evaluation and reflection. The majority of Chief Procurement Officers have spent the past year driving their teams forward through tough new terrain (inflation!) and ongoing challenges (pandemic, supply chain disruptions). Before things get really going in 2023, now is a great time for an organizational tune up.
A Great Time for an Organizational Tune Up
Using an automobile analogy, you’re in the driver’s seat as a chief procurement officer. The roads are calm with little traffic entering the first quarter of 2023. Now is the time to conduct that comprehensive 150-point inspection of your talent, systems, and operations. Wheat were our major successes and challenges last year? What were the key learnings and major takeaways from those experiences? What areas can give us better performance and outcomes and what do we need to do going forward to ensure these gains? How can we be more efficient and productive? Addressing those questions will give you the best traction and control as you shift from first to second and third gears later in the year and beyond.
Getting under the hood, let’s take a closer look at your procurement talent, systems, and operations.
Talent Drives Execution
All the best technology and efficient processes mean little without the talent to execute. Ardent Partners’ Future of Work Exchange focuses heavily on the Future of Work and what that means for enterprises. From a procurement perspective, it translates into having the right skillsets for the needs of the function. For example, if a leading initiative is procurement digitization, can your staff make that transition and generate immediate value? Investing in transformation without talent intelligence revealing existing skillsets and potential hiring needs could be catastrophic. You’re essentially left with a Porsche without horsepower.
While HR oversees many talent-related issues, CPOs must take a more active role in procurement talent strategies. This requires knowing what’s on the horizon for the enterprise and where procurement fits into that vision. Having that insight provides a roadmap for the needed skills and expertise long term. CPOs can build their talent pipeline today for the needs of tomorrow. If “The Great Resignation” phenomenon is any indication, procurement leaders can expect 10% to 20% staff turnover this year. Collaborate with HR on talent acquisition strategies and prepare to backfill critical roles prior to their vacancy.
Systems Power the Function and Enterprise Engines
Procurement systems must serve both the procurement function and the larger enterprise effectively. Review existing systems to ensure they’re meeting the needs of the procurement and sourcing teams — systems are like a vehicle’s engine. Are system functionalities and feature sets representative of modern offerings? Any existing technology gaps can affect process efficiency and cost savings. For example, procurement is now involved in complex global supplier negotiations. Does your contracting application capture the nuanced elements of negotiating globally? Relying on applications such as Microsoft Word to craft contracts is not efficient or cost-effective. On a larger scale, how do these systems perform organizationally? CPOs want to see wide enterprise adoption of these systems, with a significant amount of transactional and operational throughput.
Adoption segues into the issue of proficiency. When applications and systems are being utilized, an uplift in performance occurs. Understanding how employees are using procurement tools and their level of user sophistication can open opportunities for greater value. For example, the sourcing team may use certain functionalities to identify regional suppliers but are overlooking features that indicate compliance with regulations. With a higher frequency of use comes higher proficiency and sophistication.
Operations is the Roadmap to Efficiency
When examining processes, it is essential that the level of rigor and complexity aligns with the opportunity. While a map shows two routes, why drive over a mountain pass when a shorter, flatter route will do? An enterprise’s operational roadmap should have robust processes, but not at the expense of overspending when it’s not warranted.
Likewise, for processes such as supplier onboarding where compliance is crucial to the relationship and a contractual obligation, process support is essential. Risk evaluation may involve a procurement or sourcing team to ensure regulatory compliance with conflict mineral or other raw material regulations, for example. These processes must be tightly mapped and thoroughly documented.
In short, map processes to the appropriate complexity and strategic importance. When mapped and communicated effectively, people will follow them appropriately. And systems can ensure compliance with e-procurement tools, for example, by assuring that approved suppliers are selected.
Procurement: The Ultimate Driving Machine
Now is the time to tune up the procurement function and get it ready before your long annual drive begins. Last year’s problems are not going to solve themselves, they must be addressed or they will only get worse. The last thing you want to do is spend a week stuck out on some remote highway waiting on a new wildly overpriced engine part to arrive. CPOs and their PLTs are literally in the driver’s seat — so, spend time now getting your vehicle in shape so the procurement function can reach its destination fast and in style.
Don’t find yourself in this scenario like Clark Griswold in National Lampoon’s Vacation.
Clark: Ed, uh… this is not the car I ordered. I distinctly ordered the Antarctic Blue Super Sports Wagon with the C.B. and optional rally fun pack.
Ed: If you hate it now, wait until you drive it!
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