The Journey from Purchasing to Procurement: Part 3

Congratulations, you’ve successfully made it to the last installment of the series! Are you empowered to start the Procurement journey? If you’ve made it to reading this far, give yourself a pat on the back, you are at the very least intrigued if not starting to make plans to begin your journey. Part 1 lead the reader to take the steps to identify their Procurement maturity and current state. Part 2 informed readers of what a best in class organization can look like and began the thought process of where they would like to land in the maturity spectrum. It’s important to remember here that a la carte Procurement Transformation/Reform will not work. Procurement’s pillars are highly codependent on one another and it will be difficult to simply just transform one pillar. In fact it will have adverse effects on the rest of the pillars and organization. Let’s discuss some high level steps in order to begin your journey the most effective way possible. 

Internal vs. External Resource Support

To begin your journey, you will first have to decide whether you have the resources internally to conduct a Procurement Transformation or will be seeking the help of consultants. Many organizations in the hopes to stay economical will tack on large scale initiatives to Procurement staff’s day to day job who may not necessarily have the skillsets nor time to properly execute a transformation. In other instances, organizations do not have the understanding of how many hours/resources will be required to conduct the project which leads to several resource constraints and starts & stops to projects. If your organization has a dedicated project management, continuous improvement, or operational excellence team or if you hire/allocate resources to be dedicated to the transformation that has the skillset to drive a transformation, by all means, conduct it in house! However, there is a plus side to consultants. They run transformations day in day out. They bring to the table specialized experience, market intelligence, industry knowledge, expertise on world class Procurement, and know what works and what doesn’t work. That doesn’t mean they will implement a cookie cutter approach for every client, it just means they have conducted transformations enough times that they can quickly assess and customize a roadmap and execution plan that works for you. They are skilled professionals that are hyper focused on a client’s transformation and can truly serve as unbiased third parties to your organization to provoke the change you need.

Kick Off

After you’ve decided on your resource plan and have had the project approved by your organization, it’s vital to begin socializing the project throughout the enterprise. This is a key step in order to lay the ground work for transformation. This can be done in multiple ways such as bringing up the project in cross functional meetings, company town halls, hosting a formal kick off, etc. Whatever avenue you choose, ensure that your stakeholder community is not only aware of the initiative but more importantly involved in the project. A successful transformation is built from the ground up deeply involving not only your Procurement department, but the stakeholder community and leadership team as well. When the transformation is socialized throughout the organization and input is solicited from all parties not only will the silos within the organizations begin to break but the transformation will lead to inclusive solutions that will benefit the entire company.

Formal Procurement Assessment

As emphasized throughout the series, it’s important to understand where your gaps truly are prior to fixing anything. A thorough assessment needs to be conducted on Procurement’s 4 pillars. Keep in mind you’re not going to be able to identify all the issues by speaking with just your Procurement department. In order to get a full 360 view, it’s important to talk to Procurement’s end users (Business Units), other areas of the business such as AP, IT, HR, Legal, and even suppliers. When conducting a transformation, it’s key to include the stakeholder community in order for change management to begin early.

Build a Roadmap with Timeline

When you have realized your current state through the assessment and identified your root causes, you will have to distill actionable recommendations for your organizations to execute on. When you have figured out what you want your future state to look like, it’s critical to make a decision on the timeline. Your timeline will be highly dependent on resources, budget, other projects in the pipeline, organizational goals/initiatives, and simply your decision on how critical is it to transform. Most organizations will opt for the 18 months to 24 months plan to see through a complete transformation of all their pillars. But again, timeline will also be dependent on your current maturity and how wide the gap between your current state and goal there is to close.

Execution/Continuous Improvement Plan

When you have created a detailed execution plan, ensure you have a methodology in place to measure success. It’s very rare any execution plan goes exactly as planned. It’s important to understand there will be many pivots and shifts throughout the process where you may be reevaluating your direction. In order to make most educated decisions, it’s important to have data to serve as decision support. Ensure you set up regular cadence meetings with your transformation team and the stakeholder community to touch base on the project as well as solicit feedback on the initiative. This will allow for an open feedback loop and cultivate a culture of continuous improvement throughout the organization, which is imperative for a Procurement Transformation.