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Webinar Notes: 10 Steps to Unlock the Power of Procurement
This week’s webinar notes are from a November 19th event hosted by BravoSolution and presented by Mickey North Rizza, their VP of Strategic Services and former AMR Research/Gartner analyst. As of December 2nd, the event was not yet available on demand on their website. In the meantime, BravoSolution does have a whitepaper with the same title written by North Rizza if you are interested in more. Click here to download it.
“Conventional procurement is dead.” – Mickey North Rizza
The above quote, taken from the webinar, pretty much sums up the answer to unlocking procurement’s power, and I don’t disagree. Too much of what we’ve had responsibility for in the past has been automated for us to continue to resemble the procurement function we used to be. In fact, what North Rizza suggested in the event is that procurement is not on a gradual evolutionary path so much as we are transitioning from one distinct phase to another: Conventional then Optimized then Comprehensive and finally ‘Unlocked.’ Progressing to the next phase requires a change in perspective on spend, suppliers, and metrics.
In fact, it was North Rizza’s explanation of how procurement’s metrics need to change that provided one of the most illuminating moments in the event. In the past, procurement’s metrics were focused on efficiency – in other words, measurements of how well procurement did things. Savings and spend under management both fit into this category.
While no one will debate that those metrics still have validity, they don’t tell the whole story. What if procurement brings 100% of enterprise spend under management… but with unqualified suppliers. Alternatively, what if procurement negotiates impressive savings percentages on products that don’t meet quality expectations or that don’t arrive on time (or at all). The alternative is effectiveness metrics, which force us to ask and answer whether we are doing the right things for the enterprise rather than for procurement. Then and only then is there value in measuring how effectively we perform.
Another major transition that needs to take place during the phases is from reactivity to proactivity. You might think that the primary challenge with this is replacing the need/desire to react to problems and changes. I suggest that it is the other end of the transition that presents the greater challenge – if you’re going to be proactive, how do you know what to do? It might not be fun or value-added to spend all of your time reacting to problems that arise, but it is very clear how you are going to spend your day. Proactivity, on the other hand, requires creativity, ambition, and a vision that makes it possible for procurement to carve out both a role and a path where neither currently exist.
By the end of the event, this webinar – like all good webinars about procurement potential – got around to the topic of talent. I completely agree with North Rizza that the first step in improving talent is evaluating the current organizational structure. Sometimes just shaking up the hierarchy and assignments can have a positive impact. And obviously we want to bring in the right kind of new talent any time there is an opening.
The open question I am left with on talent is whether procurement organizations need to fight to retain existing talent. I suppose the answer requires a couple of definitions. Talent? Existing? Not all people need to be retained. There is something healthy about making enough of a change in a function that it requires a corresponding change in employee profile. And while it is never easy to sever ties with an existing employee, no amount of investment in technology, data, process, and strategy can overcome the burden of an ill-fitting team.
Based on my understanding from the webinar, an unlocked procurement function isn’t one thing, because it has to be so industry/company specific. The professionals who will thrive in this environment don’t rely on structure to be productive, although they should be able to create structure where none exists, and improve it where it does. Rather than being driven internally by spend data, unlocked procurement teams are more closely linked to supplier activity and market forces – the input from which can fuel their self-starter approach to value creation.