Yes, it can be done, and yes many companies are already doing it…how? Well, the key is balance. But before we get into that, we need to understand what procurement transformation really stands for, discuss the components and dimensions that encompass it, and how these dimensions interact and synergize with each other. Unfortunately, due to the richness and complexity of this material, not everything can be covered with a few words, as a matter of fact, not even with a few blog posts; however, we will make our best effort to achieve this with our newest blog series that will go well into 2015.

As we go through this series, we will define and discuss each dimension of the procurement function individually; we will argue about the inherent purposes of procurement and sourcing departments, the embedded processes and procedures, the technologies, and the well-known practices to operate and interact with suppliers, the development of category expertise, and the collaboration with other departments; but more importantly, we will revisit and perhaps rediscover the role – and significance – that procurement departments have within their organization, as we close the series we will discover what they need to do in order to truly become “Centers of Excellence”.

As we dive deeper into each blog and as we progress through discussing each dimension, we will comprehend that in order to fully embrace a holistic “procurement transformation” process, an organization will have to undergo a true paradigm shift; and that driven from the executive levels, all efforts will have to cascade down across all departments while gaining alignment and support from business owners and stakeholders. Think about it in the way successful mergers take place, or how household brands remake themselves; in a similar way, procurement transformation efforts leverage many of virtues those strategic undertakings require, except that unlike them, a procurement transformation engagement is, in nature, a strategic reshape at the core of the organization. Therein lays both its significance and complexity.

Successful procurement transformation efforts take time and will require resources and effort, but when conducted thoroughly, the long term value they yield greatly offsets the costs. Procurement transformation accounts for changes to the approach companies take on supplier relationships, implicates using contracts as working documents and compliance drivers (not in theory, but in actuality), improving the way goods and services are procured (buying smart, not buying cheap), drive and maximize steady savings and avoiding costs, but more importantly, the focus of a top class procurement department is not executing purchase orders or fulfilling orders more rapidly, but supporting each business unit at a strategic level, by enabling transparency, maximizing collaboration and more than anything else, by synergizing with them and their strategies. In essence, this is where the paradigm shift comes in, procurement and sourcing departments should no longer be tactical units within an organization, but knowledge powerhouses servicing the overarching organizational strategy.

How each company goes from having a purely tactical procurement operation to a self-sustainable procurement center of excellence will depend on its culture, its strategy, its priorities, and its ability to adapt. Procurement transformation is by definition, a best practice, and therefore, as technologies evolve, and the markets become smarter, the procurement departments will have to adapt and adopt new creative ways to reinvent themselves when needed, it is this how the procurement transformation process becomes the platform to a sustainable and ever-evolving procurement practice. We hope that throughout our series, we will be successful in conveying not only today’s cutting edge practices, but also the overall way to switch the paradigm and transform procurement at your organization for good. As our good friend C. Darwin (supposedly) said once: “It is not the strongest of the species that survives, nor the most intelligent; it is the one most adaptable to change.”
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Diego De la Garza

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