When introducing the Pillars of Procurement (Role of Procurement, People & Organization, Processes, Tools & Technology, and Metrics & Reporting), I make sure to explain how each of these core elements interact with one another. It is important to note that without factoring them all in holistically you are likely to develop gaps in your approach, no matter how big or small the scope is.
- The People & Organization pillar covers those who support the business including their development, structure, and engagement model, as well as the suppliers and stakeholders that interact with them.
- Process captures anything that Procurement designs, sources, buys, contracts, and manages.
- Tools & Technology enable Procurement to operate efficiently and effectively.
- These three core pillars make up the main body of procurement, however the Role of Procurement sits at the very top. This position is crucial and intentional, because you can have the best talent in the industry, the most streamlined process, and best of breed technology, but without a solid Role of Procurement all of that goes to waste.
- Finally, once all of the above are working in concert and designed as envisioned, it is important to validate the value of procurement through hard Metrics & Reporting. After all, to effectively become a trusted advisor, you need good data.
Procurement’s Shifting Role
The Role of Procurement will naturally shift as an organization matures through the stages of maturity defined as Laggard, Traditional, Augmented, and World-Class. At Laggard, the Role of Procurement is likely to be seen as a low-value, reactive function. Traditional procurement teams might be viewed as a necessary function offering tactical support only, not leveraged by stakeholders in a strategic manner. When procurement evolves into Augmented, the Role of Procurement is seen as adding value and beginning to play a critical role in the supply chain well beyond contract negotiations. Finally, at World-Class Procurement is strategic, a trusted advisory to stakeholders and leadership, and has a permanent seat at the table. As you can imagine each of the pillars will need to be managed differently as procurement matures. It’s important to keep the end state in mind as procurement grows.
In order to stay the course towards that goal and meet your long-term objectives you will need to consider the four primary factors of the Role of Procurement: Vision, Interaction, Perception, and Function.
I am fortunate enough in my role to have the opportunity to educate others on all the amazing things that Procurement can do for an organization. I get to interact with individuals at all levels from the C-suite to emerging professionals and open their eyes to a world of value beyond cost savings and transactional support.
I was also recently invited to speak at ISM World in May 2021 about some of the work Corcentric has done to elevate the Role of Procurement in two separate sessions, and I could not be more excited to share my experiences and collaborate with some of my customers. To ramp up excitement for the rest of the world, some members of the Corcentric Advisory team have put together a multi-part blog series that we will release over the next few weeks as ISM World 2021 approaches on the topic of the Role of Procurement, which will be covered in one of the sessions I am presenting in.
In this blog series we will discuss the four primary factors that define the Role of Procurement: Vision, Interaction, Perception, and Function. Stay tuned for the next blog in our series on setting the Vision of procurement.