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Webinar Notes: Are Your Priorities, People, and Technology In Line With Your 2013 Procurement Goals?
This week Sourcing Interests Group kicked off their 2013 webinar schedule with a high-level perspective look at procurement goal setting and achievement. The main speaker was Lynne McDonnell, Vice President at A.T. Kearney Procurement and Analytics. The information she shared was based on ATK’s 2011 Procurement Excellence study, which is conducted every three years to track the trends employed by leading professionals and organizations.
The backbone of the presentation is the need to establish a procurement operating model in an environment where change/transformation is either mandated or necessary to achieve performance targets. The main components of the ATK model are (1.) Structure (governance/metrics), (2.) Process, (3.) Technology, and (4.) Resources, with an underlying need to address culture and capabilities.
They acknowledge that not all of these areas can be addressed in parallel. The priority order for working through the operating model will vary by organization and should be based on a gap analysis, much like the opportunity assessment procurement conducts when looking to identify and prioritize sourcing projects. Of all the characterizations of modern procurement excellence in the study results, the one that struck me the most was ‘nimble but rigorous’.
In order to maximize the impact of procurement in the organization (and indirectly have a greater draw of candidates from the desirable talent pool) it is necessary to be embedded in every way: process, technology, strategy, visibility, business planning, etc. Procurement must be aligned with the rest of the organization in terms of both understanding and expectations – and this clarity must exist at the most senior levels of the organization.
Both risk and SRM require their own processes (and possibly operating models) in order to be successful, but for organizations that put these processes in place early on their own maturity curve, a review is essential. All long term planning should be done as broadly as possible, taking into consideration the evolving role and capabilities of the procurement organization over time.
Leveraging supplier innovation is of particular importance in developing an effective operating model, and if they are established correctly, the goals of the model may mean savings are not the most critical output. This determination should be a factor in deciding how each category will be sourced or negotiated.
Finally, it goes without saying that no procurement organization can achieve excellence without the right talent in place. Leading organizations are both proactive and aggressive in recruiting and development, using emerging practices such as department rotations, proper recognition, and social media communication channels to get and keep the very best talent. For these organizations, rotations aside, procurement is looked at as a destination for talent rather than an entry point or a stepping stone.