Procurement plus…



By: Graeme Liston
Blog

In our ever-changing and fast-paced world, procurement teams have adapted well and they’ll be expected to continue to evolve and deliver. But what next? There is no question that a strong and capable procurement team can be instrumental in contributing to the success of an organisation. But, defining and delivering global sourcing strategies and influencing at executive levels, within their organisation and their supply base, suggests that procurement professionals have the potential to take on much wider business responsibilities…

Leading transformation

Similarities in knowledge and skills, such as strategy definition and implementation, influencing and finding creative solutions, along with their natural commercial and efficiency-based focus, mean procurement professionals share many of the same core capabilities as those who lead large-scale business transformation.

Having come from a procurement background to leading large change programmes, including the account opening process for an incumbent UK bank, I’ve certainly seen the correlation between the core skills required. It was clear to me that opening a bank account is a series of supply chains from internal and external disciplines that come together to provide the service. Adopting this approach allowed me to simplify and refine what was a complex and cross-boundary challenge.

However, what I soon learned was that there was an urgent need to understand and interpret the wider business context and complexity, rather than taking the singular procurement point of view. Supporting and leading are also obviously two very different things. This experience gave me great insight into how procurement teams can develop in order to make the transition to leading business transformation initiatives.

Strategy & leadership

Continuing with the theme of opening a savings account at a bank, what was the key to defining the strategy? Gaining a much deeper, wider appreciation of the internal and external dynamics of the business and its customers.

Insights into customer expectations and trends, such as considering how customers will bank in the future, which lifestyle products were important and when, and which channels they prefer, were pivotal. How we use customer data is intrinsic to the strategy, which enabled a stronger understanding and impact on the entire end-to-end business model. Translating this into an optimal end state from thorough analysis and developed solutions, applying clear logic to business decisions coupled with very disciplined programme management is something that someone must own and be held accountable for.

Being able to work with and influence the customer-facing businesses, operations and technology functions is critical to the success of the programme. They have built their capability and knowledge over many years and establishing two-way respect is key to have the credibility required to work effectively with them. And along with robust facts and data, to challenge them on their current ways of thinking…

Committed, visible leadership & effective challenge is non-negotiable for success.

The transition from supporting transformational delivery to leading transformation is not for the faint hearted! Committed, visible leadership and effective challenge is non-negotiable for success. Even the most accomplished business leaders may not necessarily have the experience and knowledge to cover all aspects of business transformation.

By surrounding yourself with a blend of experience, knowledge and challenge, along with strong resilience helps to overcome the many hurdles that are thrown in front of you. The real challenge comes when managing the complex architecture that interconnects systems and processes, internal and external to the organisation. Dealing with and appreciating the network of dependencies and how each one can impact the overall outcome, good or bad, is a steep learning curve.

Ignore technology at your peril…

Technology clearly influences the ways we deliver value for customers more now than ever before. And the sheer pace of the digital revolution can often leave organisations struggling to respond if they don’t anticipate the future.

Determining the impact and feasibility of integrating new technology into existing architecture and operational processes requires a robust understanding of the landscape and bringing together the right business capabilities to explore, design and test potential solutions.

This means that there is a need to become ‘tech-savvy’ quickly, to formulate solutions spanning complex legacy architecture, emerging technology startups, increasing regulation as well as the ever-present threat of cyber crime.

The customer rules

It’s important to gain an appreciation of the customer-facing businesses as their existence revolves around putting the customer first. Decisions and demands are made to improve customer experience and drive increased revenue. This can conflict with other parts of the business that often myopically focus on efficiency and cost. There is a need to move away from the singular view point, which is often dictated in procurement objectives and look at outcomes for the organisation as a whole.

Recognition that customer-led design is an absolute necessity, understanding the methodology to removing customer pain points, and carrying out rapid prototyping to provide better user experiences that attract and retain customers, ultimately all lead to business growth. Scouting and sourcing for customer and business solutions, particularly technology, can be challenging as the market evolves rapidly. However, it can’t be ignored, and being a part of innovation ecosystems like in Silicon Valley should be explored to remain at the leading edge of technology advancements.

“Innovation ecosystems like in Silicon Valley should be explored to remain at the leading edge of technology advancements.”

Not just moving the deck chairs

It’s vital to fully understand business operating models, and how best to organise resources around systems and processes. If focused effort is not applied to controlling organisational resources, they become siloed and inefficient. A re-design of internal operating models is required not only to accommodate new technologies, but also to challenge existing organisational boundaries, responsibilities, process and locations of disciplines. This ensures that there is optimal efficiency in the way they are connected.

Equipped with an appreciation of lean methodologies provides a key component to drive towards operational excellence. Adding a team of lean experts to the programme allows an independent, methodical and fact-based analysis of the end-to-end customer journey. This provides multiple improvement initiatives which reduces account opening times by hours, and even days.

Conclusion

It’s clear that procurement professionals can effectively draw on their core skills and transition into a successful business transformation leader. There is however a steep learning curve, switching from a supporter to a leader, gaining a deep understanding of the broader business and, how to deliver for collective success. To do this on a procurement organisational level there needs to be the desire and a clear strategy to build the capability, challenge existing organisational structures and see beyond traditional approaches.

The way organisations are having to develop and deliver strategies is changing in the digital age. You can’t out-innovate the market, so the most successful companies are increasingly looking outside their organisation and scouting for partnerships with leading-edge solutions, rather than relying on internal innovation alone.

Procurement itself should be taking the lead in identifying and accessing innovations and new capabilities in the market to help shape business strategies. Organisations that are not looking outside their own walls to position themselves for this shift will inevitably end up being left behind.

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