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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