I was recently interviewing Philip Ideson for an episode of The Sourcing Hero, and he brought up part of our Procurement, Inc. whitepaper series that is particularly relevant given today’s economic conditions. You can access that episode here.
We call it the cycle of shifting procurement priorities, a.k.a. the procurement hamster wheel.
What companies require from procurement naturally changes based on a number of factors, and external economic conditions are one of the strongest.
Today, with inflation at 40 year highs and the possibility of recession looming large, we find ourselves at the top of this cycle, with changing business conditions elevating the value of cost savings above almost all other priorities – in some cases even leading to a change in procurement leadership.
Procurement teams that are ‘successful’ in these conditions will deliver savings, but frustration will abound inside and outside of the company. That, coupled with an improvement in external conditions, leads back to a time of relationships, value, and strategy – until things change again.
If this cycle sounds familiar, you are not alone. Most of us have been around the loop multiple times. The question is whether this time will be different. Has procurement progressed enough in terms of talent and technology to preserve our processes and priorities?
As we wrote in the paper:
Procurement organizations who adapt to a new buying process and escape the hamster wheel all have one thing in common.
They are deeply in tune with the needs, the challenges and the opportunities that their business faces, and they have built a value proposition that aligns with those requirements. They drive competitive advantage and therefore represent a compelling internal investment proposition.
In short, they operate like a strategic services business, not a typecast function.
The trick to avoiding the hamster wheel is business alignment, functioning as a business within the business. Making that idea a reality is the focus of the Procurement, Inc. framework, which you can download for free here.