Mickey,

These are great points you raise here, which I agree with entirely. I’d add 3 more:

(a) Unclear or poorly-defined goals;

The objectives of many change initiatives are often poorly-defined. Even as I write, I’m supporting a client with a Procurement change initiative and my first task is to educate the client on the vital importance of making the ‘goal posts’ crystal-clear up-front. Unclear or poorly-defined goals create confusion amongst Procurement staff and stakeholders.

(b) Adequate resources;

I have seen too many change programmes which lack adequate resources to ensure effective execution – people, finances, physical resources, etc. This always creates frustration for those involved, and frustrated people never deliver their best efforts.

(c) Robust approach;

As you suggest, not having a flexible plan is a problem. I also think that the core essence of the plan is critical, i.e., what the plan entails or the overall approach being adopted. For example, a project plan that doesn’t adequately incorporate effective communications is doomed to create dissonance.

It is worth pointing out that many Procurement transformation initiatives fail to deliver lasting success, not just because of these challenges but also because the underlying premise is misguided. Transformation efforts centred on increasing financial performance are often flawed. And a year or two later, yet another transformation initiative ensues.

Focussing solely on financial measures like cost savings or Procurement ROI belittles Procurement’s true value-add potential in organisations. Procurement transformations that deliver truly sustainable performance success are those that recognise that Procurement’s ‘value’ contribution exceeds financial or economic gains. Critical elements like building risk resilience, boosting people capability and improving internal customer satisfaction are just as important.   

The most vital requirement for Procurement transformations is to focus on enhancing ‘Procurement effectiveness’. This is the conduit to achieving an optimal outcome that delivers better financial performance for the enterprise and simultaneously leverages Procurement’s true value proposition.

A series of keynote speeches I gave for the Chartered Institute of Purchasing & Supply (CIPS) a while ago focussed on this issue. The route to enhancing Procurement effectiveness involves 5 fundamental actions;

  1. Build an effective Procurement organisation
  2. Deploy enablers (processes, systems and tools) that are fit-for-purpose, not necessarily “best-in-class” or “world class”
  3. Manage the supply base robustly, balancing good risk mitigation with extracting value (not the same as “cost reduction”) from suppliers
  4. Apply common-sense performance management to Procurement staff; suppliers; Procurement projects or initiatives; and the overall function
  5. Build the Procurement brand, and reposition Procurement in stakeholders’ perceptions.

Procurement transformations that imbibe these actions, while avoiding the challenges mentioned earlier, are more likely to deliver change that is truly successful. It’s rarely ever easy, but extraordinary achievements always require extraordinary effort.

© Sigi Osagie 2013. Features advance extracts from Procurement Mojo® by Sigi Osagie © 2014

Comment made on Procurement Leaders blog, 27-Nov-2013, in response to the blog post “Five Reasons Why Procurement Transformation Fails” by Mickey North Rizza, 21-Nov-2013