Managing Effective Procurement Transformation

Managing Effective Procurement Transformation

Managing Effective Procurement Transformation

Project Manager at Procura Consulting

COVID-19 has made procurement transformation more important than ever before

What has the crisis taught us?

As the initial shock of the COVID-19 situation begins to settle and many organisations start to develop their new ways of working, the crisis has clearly demonstrated how quickly society, organisations, governments and entire countries have had to adapt to change. Research shows that 87% of global businesses have been negatively impacted by the disaster. However, whilst the initial challenges of the pandemic focused on maintaining day-to-day operations and continuing to satisfy customer demands, the priority for business leaders is now shifting to a strategic vision for the future.

It is becoming clear that this disruption to the status quo has created a catalyst for change and opportunity. Business-as-usual approaches are no longer enough for continuing to operate effectively, and this provides the perfect time to challenge how things have been done traditionally. Organisations that can quickly recognise this shift and are able to develop innovative new solutions will be much better placed to sustain long term added value beyond the immediate crisis.

Why is this the right time to consider procurement transformation?

The impact of the COVID-19 pandemic is the single biggest challenge faced by procurement organisations in the 21st century and illustrates how interconnected, and often vulnerable, links in the supply chain are. All eyes are now on the procurement function to help the bottom line and achieve savings from bought-in spend to support business longevity.

However, simply achieving savings will not be enough in the long-term. Priorities for procurement leaders are beginning to change from tactical ‘keeping the lights on’ sourcing to ensuring long term sustainability. As procurement functions have been forced to become much more flexible and responsive in wake of the pandemic, it has prompted executives globally to re-evaluate their entire supply chains from a much more strategic perspective.

In a recent survey conducted by Procura, procurement leaders are employing a wide range of commercial and logistical responses to the crisis, with 75% working with their suppliers either through active management or collaboration to achieve business continuity. This highlights the ever-increasing importance of deeper supplier management and the benefits that can be achieved through long-term strategic partnerships.

For a strategic sourcing approach to be truly effective, procurement executives also need to work closely with internal business partners to make cross-functional, frequently cross business unit end-to-end decisions regarding their supply chains. In recent years we have witnessed the growing importance of procurement as a function that is increasingly represented at C-suite level. The current crisis is further deepening this relationship between procurement and business partners, which will enable greater spend influence, early involvement, and the ability for procurement to anticipate future challenges in the supply market.

By transforming its procurement capabilities and further enhancing the strategic nature of the function, organisations will be much better equipped for developing their competitive advantage. The challenge is in maintaining this strategic focus, not only in the wake of COVID-19 but for years to come.

How can Procura support procurement transformation?

Transforming the supply base and challenging what has been done in the past is crucial for unlocking the potential for step-change impact. According to our research, almost half of firms globally will overhaul their entire procurement and supply chain strategies in the wake of the crisis, however 63% of executives (from the 400 organisations questioned) do not believe that they are equipped for implementing a supply chain transformation programme.

So where should you start when there are currently so many conflicting priorities?

1. Understand the maturity of your procurement function

Organisations differ greatly in their procurement maturity – some are starting out on a journey to gradually improve the function whilst others have been on the journey for many years. Where are you now? At Procura Consulting we measure and assess 6 key enablers focused on:

  • Strategy & Organisation
  • People & Skills
  • Strategic Procurement
  • Supply Chain
  • Info, Data & Systems
  • Policies & Procedures

 

2. Develop your Procurement Strategy

An appropriate procurement strategy needs to be established in order to drive the function, deliver success and clearly articulate the the purpose of the function, how it operates and, importantly, how it delivers the overall objectives of the business. We work with clients to form a business-specific procurement strategy that is built upon an organisations core values and guiding principles, and which focuses on both short and long-term strategic objectives.

3. Develop a roadmap for transformational change

A tailored transformation roadmap provides the means for executing your procurement strategy. At Procura  we develop a roadmap based on the outcome of the procurement maturity assessment (Functional Diagnostic) with clear, actionable targets for achieving procurement excellence.

4. Monitor the success

Maintaining a clear view of the success of your procurement transformation programme is vital for ensuring stakeholder buy-in and sustaining business momentum. We use the 6 key enablers as the basis for developing clear success measure indicators, to ensure that the procurement function continues to add value to the business.

Procurement transformation is required now, transformation that is supported by clear analysis and goals to achieve success. Following the initial fight or flight response to COVID-19, it is now time for organisations to refocus, look ahead with caution and openness to the opportunities that can be realised in tomorrow’s new normal.

One thing is clear - in an uncertain future, we can be certain that more change is yet to come.

To find out more, please get in touch on+44 (0)203 693 7275 or Email us: info@procuraconsulting.com

If you would like to read the results and recommendations of the survey please click here

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