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Journey of procurement transformation begins with …………..Part I




As a part of procurement consulting practice, I used to interact with many procurement end users few years back. During dinner conversations I heard stories and jokes about how that so called “transformation project” is going on for years and after change in leadership couple of times – how nobody knows where it will go.
During the 1980s, procurement function’s focus was on creating a well-structured strategic sourcing process. It evolved further over years and moved towards developing sophisticated strategies, cross functional and delivering value to the organization. To achieve these goals – leaders planned for larger “procurement transformation” initiatives. The very definition of “transformation” implies a change from one form to another where the outcome is supposed to be much better. So in procurement world, this means rather than just applying “band aid” approach – changing things here & there – overhaul the existing function with focus on processes, people, technology, systems, compliance, communication et al.
When you talk about any such “overhauling” efforts – the timeline is over years. Procurement being a critical function to all organizational functions the interconnecting process change requires lot of collaboration between different business units. Also – the business still runs – mergers, acquisition still happens which directly impacts the “change” that you are planning. While many CPO’s made good progress to make procurement as a strategic enabler for organization, majority failed.
There could be many factors for failed initiative– One of it is “Wrong first step” 
Chinese philosopher Laozi famously said “a journey of a thousand miles begins with a single step” – which means even the longest and most difficult ventures have a starting point. What if that “One Step” or first step is wrong? – you will still reach somewhere but may not be the goal you have decided.
The overwhelming journey of transformation consists of holistic integration of multiple components like – People roles & responsibilities, Process Automation, optimization, policy creation, monitoring & compliance, defining & implementing technology tools, change management, data management, spend analysis, Supplier relationship management, contract management, risk management and so on.
As initiative starts from all different directions, the first & most important strategic step of “Spend Analysis” does not get the due attention as a “first strategic step” and journey becomes forever.  Journey of procurement transformation should always begin with a focused efforts on “Spend Analysis”
What is “Spend Analysis” and why it’s so critical to the transformation journey – let’s look at it in next post. 

Original Blog posted on Linkedin Pulse - https://www.linkedin.com/pulse/journey-procurement-transformation-begins-part-i-prashant-mendki
 

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