Smart organizations invest efforts to enhance their Procurement effectiveness because they recognize the immense financial benefits and competitive advantage it brings. But such “Procurement pioneers” are in the minority. Sadly, but in truth, majority of Procurement functions today still struggle with achieving the success and recognition they crave. They limp along with suboptimal functional capabilities and low esteem in the wider enterprise. And Procurement is nowhere near as embedded in the fabric of the organization as it should.
Purchasing professionals in such functions are frustrated by the myriad of problems this brings. For Procurement leaders and staff, it appears the biggest frustration they face is the lack of appreciation of their value-add in their organizations, and, commonly, being “denied” the opportunity to showcase their value-proposition.
As one purchasing manager put it in a recent blog post, “Why should I have to constantly fight to be allowed to do my job?!”
Why indeed?
But here’s something else to ponder: would you show up at a gunfight with a knife?
Few of us would. So why moan about the organizational contexts Procurement has to operate in? Our focus should instead be on being properly equipped for success, by taking the right actions to achieve our desired outcomes—that’s exactly what effectiveness means: doing the right things to get what we want.
Effectiveness is central to success in any realm of life. And it’s more important than efficiency; you might be highly efficient at climbing up a ladder, but what if the ladder is leaning against the wrong wall?
Effectiveness—doing the right things—is quite a simple notion to grasp: if you want to increase your chances of surviving that gunfight, you turn up with a pistol; if you want to head off to your right, you take a step in that direction; if you want a clean car, you wash it yourself or take it to the carwash; if you want some dangerous excitement in your marital life, you get a lover…
So, what does Procurement want?
Judging by the plethora of articles, blog comments, trade surveys, roundtable discussions, expert panel opinions, and so on, most purchasing people seem to agree that what Procurement wants boils down to three things, fundamentally:
- The capability to deliver on its functional obligations
- The “organizational space” to get on with delivering those obligations, and
- Recognition of Procurement’s value-add across the wider organization.
The route-path to achieving these outcomes is to enhance Procurement effectiveness.
Procurement functions that achieve lasting success and enjoy high regard across the enterprise always embody the principles of Procurement effectiveness. They focus on the cornerstones of enduring functional capability and success illustrated below.
NO. 1—Build an Effective Procurement Organization
Why? Because it is people that do the purchasing work, so people matter most; far more than your slick P2P process, sexy sourcing strategies or dazzling PowerPoints. Your Procurement organization is the bedrock of your success, and the aggregated talent of your people is the most valuable component of your functional balance sheet.
Some Key Tips:
- Get an effective Procurement leader, first and foremost; because a fish rots from the head down. Leadership is the glue that binds together the other components of an effective organization
- Provide clarity of purpose and direction for your people, through clear and appropriate SMART goals, aligned to the corporate agenda. Goals are the North Star around which the whole Procurement function must be aligned
- Build your people capability through engagement and sensible talent development. But remember, “talent” is not just about technical competencies; soft skills are more valuable to navigate the organizational terrain with success
- Align your people in a sensible organizational structure, with clear ownership for all aspects of functional responsibility. Having talented individuals operating in a dysfunctional organizational structure is a recipe for frustration
- Nurture a progressive culture. The culture is the DNA of the Procurement organization—it says everything about what we stand for. Yet it is our attitudes and behaviours at an individual level that shape the culture in Procurement.
Effectiveness means 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 above.
Look out for my subsequent posts in this series on the other steps and related tips to enhance Procurement effectiveness.
