I have seen numerous articles in LinkedIn and elsewhere regarding putting a strategic framework in place within the first 3 months or so after taking on a new role as head of Procurement.
I also wrote an article entitled “A Manager – some steps to do when putting together a team” about the strategic view of Procurement in a business, putting together a team, and what needs to be done before getting down to the day-to-day activity in a new procurement department.
Creating a Procurement Framework for your Team
I would like to pick up on this theme. Whether you're building a new procurement team for an organization that's never had one or working with an existing team is immaterial, in my view.
When starting a new position, I expect key deliverables would have been dealt with and agreed upon during the interview process, meaning that when the new job starts – the clock starts ticking as well.
Many procurement professionals I know spend a fair bit of time working through what they expect to tackle in the first few weeks on the new job.
Personally, I would have my engagement plan ready and good to go before day one. "Why?" you may ask. To shorten the learning curve. By having providing structure for what needs to be done and delivered in the shortest time possible, service levels can be maintained by the department, and any uncertainty within the business can be dealt with as quickly as possible.
Strategic framework. Strategy can be defined as the long term plans put in place to fulfill a predetermined objective over a specific period of time. For the sake of illustration, let's assume there is an existing team, and there has been some realignment within the business identifying the need for a procurement manager to take Procurement and Supply to the next level. There are purchasing officers in place, along with an inventory controller, and a warehouse team. Going into this existing procurement department will require numerous strategies – hence the term strategic framework.
Putting in place a strategic framework for the procurement team requires an approach from two directions: first, from the team itself; and second, from business stakeholders. Why do we need this two-pronged approach? The team itself is going to deliver solutions to the business while the business and its stakeholders needs have to be met or surpassed in a way that causes them to say “Wow.” Both are important.
Procurement is so much more than getting the lowest price.
Here's what else it's about:
- Sustained added value to the business (best prices and/or end-to-end value chain management)
- Supplier relationship management
- Optimized spend management across all categories
- Product rationalization and standardization (Ignore at your own peril!)
- Supply Sustainability (This goes past avoiding a supply shock – it's about incorporating environmental criteria into the way we carry out our business)
- And, finally, to any procurement professional worth his salt – a great deal of personal satisfaction at having exceeded both what was expected of him and his own personal goals. I believe procurement professionals are motivated and passionate; and while it may be cliché, expressions like “The world is your oyster” are very much true.
Procurement people are able to deliver more than just category and contract management. Good procurement people routinely think outside of the box and should accept change easily. This is because procurement is fundamentally about change.
Where is this going? This is what needs to get encapsulated in a strategy framework. One good place to start is with people, process, and tools. The combination of these three things is going to take procurement and your business to the next level.