What does transformational procurement look like?

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Author: Margaret Gilbert 

Procurement – what image does this project to the business world? Usually, it is a mix of rules, paperwork and being told ‘no’. Procurement has moved on but the perception lives on and some procurement practitioners act and work to that belief. The same has to be said of some suppliers as well.

We should be aiming higher than transactional procurement and to promote/provide vision and clear direction. If we stay as we are, then in 10 years – and probably sooner – then we will find that technology can undertake the basics.

For procurement practitioners and procurement to be relevant we must transform procurement from transactional to transformational. We should focus on strategic procurement and how we can add value. By doing so we can add to the organisation.

Procurement requires procurement practitioners who are agile in their thinking and actions.  In addition, for procurement practitioners to be able to think strategically for procurement requirements.

To achieve a paradigm shift then a move from transactional procurement to transformational procurement should occur with the focus on achieving the best result for each specific procurement and achieving procurement sustainability. This encourages innovation, resilience and positive interactions.  Transformational procurement is a mix of collaboration, innovation, buyer/supplier relationship, ideas and vision which works for operational and interactive procurement.

To be able to think ‘outside the square’ is, and will continue to be, essential, as ways for maintaining relevancy continue as part of any paradigm. New ways of operating can provide more effective ways of working.  The same way of operating will most likely produce the same result currently being achieved.  Is that what you are looking for? Or something different?

Modernisation is required to take procurement from historical ways of working to a new focus recognising fast moving economic circumstances. Procurement has to adjust to meet the ever-changing situation. We need to be agile in our thinking and our actions. Another pathway has to be found and we have to show that procurement has a positive role to play.

Modernising procurement is required to take account of the new generation – we should aim for procurement implementation so the next generation of procurement practitioners can have a ‘voice’. We cannot afford to lose another generation.

The next generation – procurement practitioners

When we consider this, it is vital to know that it will take procurement practitioners to move procurement along so that both can benefit.  Procurement practitioners will need to:

1          Be a visionary leader

2          Know the business

3          Be a change manager

Vision is essential and the ability to effect change. Procurement has a lot to do and plenty of challenges to overcome so that we leave a positive path for the next procurement generation. Positive procurement is a must.

If all three of the above steps can get us there – we just need to get our heads into the strategic arena and focus on more than just ‘business as usual’. We need to be listened to. A part of interacting is to talk to the right people – but we need to be clear about our message.

The next generation – Procurement

There is also a requirement for procurement qualifications so that procurement practitioners have a professional development goal. Procurement looking forward should take account of both people and technology and of course procurement requires both.

While there is a need for procurement ‘rules’ there is an even bigger need for procurement practitioners to be able to see the ‘big picture’, be able to look at all options and look past the usual way of operating as the only way of operating. Let us not be a slave to the ‘rules’. An open mind is essential as is a positive attitude.

Procurement has a lot to do and plenty of challenges to overcome so that we leave a positive path for the next generation of procurement practitioners.

ISSUES – Procurement

Now focus – the attention on a ‘business as usual’ basis and dealing with what is required does not lend itself to strategic thinking or looking ahead to organisational requirements.  This is very narrow thinking and leads to same outcomes.

The same outcomes should allow for a different way of working that may well lead to better outcomes.  There is a need for process but there is even more of a need to treat each procurement as a separate exercise but part of a larger enterprise. Clarity of thinking is essential.

Short term thinking rather than looking ahead – this is partly due to the reality for government departments to operate in the electoral cycle rather than having a longer financial timeframe. This is short sighted in the extreme.

Process focus – often on what has already occurred rather than ‘what could be’. The tried and true is utilised as a quick fix without giving thought to what is possible.

Lack of training – of staff. Often procurement staff are left to their own devices, and they learn from hard experience and experience some tough knocks.

Technology – we allow technology to be the answer when in fact it is a tool.  We should rethink how we use technology so we better reflect the fact that procurement is about people.

Perception – that nothing can change and that procurement is not important.

These issues do not lend themselves to look at how procurement can be done better, to look at possibilities and think outside of the norm.

Where does this leave us?  It leads to:

  • Poor outcomes
  • Unskilled staff.
  • Lack of ‘soft’ skills.
  • Lack of ideas, direction.
  • Risk adverse procurement.

This does not lead to positive or modernised procurement.  We should welcome procurement thinkers who can provide necessary procurement leadership.

Issues – procurement practitioners

Apathy – we should move away from being silo players and recognise that we are a part of the organisation.  We have to be able to provide guidance. To do that we need to have procurement practitioners who want to assist, rather than be ‘seat warmers’ and continue to operate in the same old way.

Time – always an issue but doing what is right now will save later in time and money.

Lack of thinking – This is understandable to some degree as it is often a case of ‘business as usual’ but this has to change.  Strategic procurement is a must to look at medium to long term procurement requirements.

Lack of expertise – If we do not have the expertise – then we must work towards achieving it.  If you do not have the expertise, find someone who does, who can provide to you a clear direction to follow or an implementation process.

Failure to plan – The failure to plan is often the cause of why something does not happen – this is not an excuse. You need to plan … and early.  Fail to plan =  plan to fail.

Procurement practitioners should involve suppliers who can assist in providing innovative solutions and positive interactions or communication.

We should move away from strict ‘process thinking’ to more transformational procurement thinking.  If we ask procurement practitioners to look at and consider options, this ensures that:

  1. Outcomes will be better.
  2. Ideas and vision can be outlined.
  3. Discussions with supplier occur

and most importantly consideration is given to alternatives and therefore choice is available to continue with or discard – at least the thinking has occurred.

This can lead to innovation and innovative practices which is a forerunner of collaborative procurement between buyer and supplier.  It is worth putting in the work for such an outcome.

Equally, it can be seen that change, new ideas, use of experience are positive aspects that can enhance procurement in its entirety and also be relevant for specific procurement requirements. The existing ‘rules’ or ‘process’ can be limiting and while for some this can be comforting it can also not provide the result required or wanted.

The objective is not what is best for the procurement practitioner but for the outcome required. The question that should be asked is: why do procurement practitioners operate in the ‘comfort zone’ rather than looking at all options?

Modernisation of procurement should also apply to procurement practitioners in general.  Procurement practitioners should be ready to be flexible in their thinking and actions.  Strategic procurement applies to procurement practitioners and their actions as much as it applies to the procurement of goods or services.

While procurement practice needs to be transformed so do procurement practitioners. We need to be transformed from order takers to proactive procurement practitioners who can provide value and make strategic and operational decisions.

We certainly need procurement transformation as well as to maintain and nuture talented procurement practitioners. One way of doing this is to take a hard look at what is really needed and also procurement leaders and leadership.

How to achieve the necessary steps

We have ‘processed’ procurement to death and we should aim at providing mechanisms for procurement practitioners to ‘grow’, allow fresh thinking and encourage empowered procurement practitioners. From there then specific procurement will change.

We should encourage innovation and collaboration which will occur once procurement practitioners feel they can consider options and contribute to the conversation.

We should not be afraid to look at other options, equally we should not undertake a different way just because we can.  We are in a better position to make appropriate decisions by being informed, by looking and deciding on another way – or the same way – it could be a case of ‘yes, but not now’ rather than a closed ‘no’. The research will never be wasted.  What we should be afraid of is the inability to undertake change or to consider alternatives, to make decisions that are right for the specific procurement.

How to achieve:

  1. Need to transform ourselves – and how we undertake procurement.
  2. Think broadly, and clearly as to what is possible.
  3. Strategic plan – strategic procurement. Our strategic procurement plan has to fit into the organisation’s strategic plan.
  4. Communication – with suppliers and include their solutions.

Transformational procurement is the future and we must start now to achieve.  Procurement practitioners should promote transformational procurement along with the benefits to management. Get involved early and be ahead of the change that is coming. There is the danger of being left behind. Technology is here to stay. Technology can assist the procurement process.

We have to move from the procurement basics and rigid ‘rules’ thinking about each procurement requirement.

The future for procurement requires:

  1. Clear procurement strategy covering 1-3 years, 3-5 years. This can link to points 4 and 5. A strategy provides for direction and allows for planning and budgeting.
  2. Trained staff. – is self-explanatory.
  3. Strategic contracts. – knowing which contracts are strategic is essential.
  4. Collaboration between buyer and supplier. Collaboration is essential between both parties to achieve the best solution.  Procurement qualifications.
  5. Procurement sustainability – Collaboration will assist greatly here.
  6. Procurement ‘Elders’ – to move procurement forward.

The danger of being left behind

Procurement is not static, we cannot continue to undertake procurement as we always did 10-15 years ago. Our organisations require the best procurement solutions. If we cannot provide there is a danger of procurement and ourselves being minimised.

While technology can provide procurement solutions from a technical perspective there is still the requirement for strategic thinking about options and possibilities.

Procurement is about people – we should let technology do the ‘grunt’ work so we can focus on what is important such as the relationship, collaboration and leveraging. This is the basis of transformational procurement.

Summary

We should work to move procurement to transformational procurement.  We must be proactive, we have to keep up. Procurement is not static. We cannot be fixed in our thinking.

We must take the opportunity to be relevant and to provide solutions that are forward thinking.  Procurement practitioners have to adjust our focus and by doing so we can achieve transformational procurement.

At times, we get ‘stuck’ in the ‘now’. We have to move our focus by looking at the ‘big picture’. It is time that we made a change – before change hits us – so we can influence the way forward. If we stay as we are then other influences can make decisions on procurement that does not assist procurement – or procurement practitioners. Get involved and work to achieve transformational procurement.

Modernisation of procurement is essential. It is time to look at procurement holistically and what is actually required rather than abiding by rules/process only that can lead to less than optimal outcomes.  Procurement is not ‘one size fits all’ and recognition of alternatives should be the norm rather than the exception.

We have the opportunity to achieve positive procurement through relationship innovation and ensure that we make procurement resilient through our actions. This is one step that we can take that will assist the next procurement generation.

Let us build a positive forward looking procurement environment that is resilient for procurement and procurement practitioners.

Margaret’s book ‘Contract Matters: A Future for Procurement’, looks at what future procurement might look like and what we need to do to achieve so that future procurement practitioners can benefit from our work now. We will of course make our own lives easier as well. The book, $30, can be obtained through www.contractmatters.com or through margaret@corpcontracts.co.nz  

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