In my earlier article on enhancing Procurement effectiveness, I highlighted why savvy organizations invest great efforts in boosting their Procurement Mojo®. I reiterate some pertinent key points below:
- FACT: Organizations with leading Procurement capability are in the minority. So, sadly, most purchasing people work in organizations with suboptimal approaches—the “Procurement laggards”.
- FACT: Procurement is nowhere near as embedded in the fabric of laggard organizations as it should be.
- FACT: Purchasing professionals in such organizations are frustrated by the myriad of problems this brings. As one purchasing manager put it in a blog post, “Why should I have to constantly fight to be allowed to do my job?!”
Why indeed?
The route-path to achieving the improvements purchasing folks want and get the Procurement function firing on all cylinders is to enhance effectiveness.
Effectiveness means doing the right things to achieve the outcomes we want. But many Procurement functions are not taking the right actions to achieve their desired outcomes.
If developing sexy sourcing strategies, implementing a “best-practice” P2P process or delivering bucket-loads of “cost savings” do not yield improved functional capability or heightened recognition of your Procurement function’s value-add in the enterprise, then you must go back to the drawing board!
Many Procurement functions give overriding focus to the numbers. But when we focus too much on the numbers we fail to leverage the power of our collective imagination and converged effort when channelled towards building sustainable capability. Think about the Apple team that developed the iPhone and brought it to market; do you think they were inspired by the number of handset sales predicted or the vision of their game-changer product?
The numbers are often measures of efficiency. But efficiency without effectiveness ultimately leads to failure, hence the frustration many people feel. So focus your efforts on enhancing effectiveness first. Procurement effectiveness is the keystone of sustainable success. It is what separates the Procurement pioneers from the laggards and the mediocre.
Procurement functions that achieve credible success and enjoy high esteem across the enterprise always embody the principles of Procurement effectiveness. They’ve upped their game and created a strong, positive “Procurement brand” with a capability to match.
How? They sustain a strong focus on the 5 cornerstones of Procurement effectiveness illustrated in Part 1 of this series.
NO. 2—Deploy Fit-for-Purpose Enablers
Part 1 of this series covered the first cornerstone of Procurement effectiveness—building an effective Procurement organization. It’s the first step in the dance; because people are the lifeblood of any Procurement function.
You can never enhance Procurement effectiveness and create sustainable success without developing your people capability, even with a sound strategy and best-in-class processes and systems.
That’s not to say processes and systems are unimportant. It’s more a case of knowing how to line up your ducks. In fact, deploying functional “enablers” (processes, systems and tools) that are fit for purpose is the second step of the journey to your Procurement Mojo®.
The fitness-for-purpose requirement is far more important than the popular quest for “world-class” or “best-in-class”. Best-in-class may not always be best for your Procurement function and its particular context. What is critical is that your Procurement enablers are both effective (focused at the right things) and efficient (enable people to do their work with minimal hassle).
Importantly, while enablers are tangible components of Procurement effectiveness, the problems most Procurement functions face here often relate to human factors or “soft” issues.
When you examine Procurement processes, systems or tools that are not fit for purpose, the underlying root-causes can usually be traced back to decisions, thinking patterns and actions by “people”. This can be seen, for instance, when people tasked with developing or improving processes and systems end up applying a Rolls-Royce solution to a Ford Escort problem.
It is people who make enablers fit for purpose, or not.
Some Key Tips:
- Be pragmatic, keep things simple and apply common sense. If you can utilize a simple but effective supplier scorecard on a spreadsheet, do so; don’t invest in unnecessary, jazzed up software. If your demand-to-fulfilment cycle is unavoidably complex, get a technology-based solution; don’t try and run things by phone calls, e-mails or smoke signals
- No system or tool should ever be introduced for its own sake; its utilization must always relate to supporting a process. And processes must be focussed on Procurement’s functional responsibilities and goals
- Make sure your basic Procurement processes are sound—sourcing, supply execution, and supply base management, and use defined processes for “cost savings” and risk management. I covered this in the prior article and I break it down in detail in Procurement Mojo®
- Think of the end-user and involve key stakeholders. If your processes and any related systems or tools are arduous, or your approach lacked adequate people engagement, don’t expect high levels of compliance
- Leverage technology as much as possible without losing pragmatism. But technology enablement should never be applied to broken processes or inappropriate tools
- Secure executive-level support for any major process or systems change. It’s a critical success factor. A solid business case that articulates the balance of costs, benefits and risks always helps
- Widely publicize the launch of any new or amended process, system or tool. It should be part of a sound communications approach that emphasizes the benefits to stakeholders and the wider enterprise.
This isn’t meant to be a definitive list, but it highlights some of the most vital points to ensure your Procurement enablers are fit for purpose, a key step in enhancing Procurement effectiveness.
Effectiveness is doing the right things to get what we want. The right things are not always the most popular or widely-accepted actions. But if you examine instances of lasting Procurement success, you will find the embodiment of the practices outlined above.
*Learn the other steps and related tips to enhance Procurement effectiveness in my post “Top Tips for Enhancing Procurement Effectiveness”.
