Procurement, Inc. is our approach to aligning procurement performance with corporate objectives.
Technology has changed the buying process.
Stakeholders are typically 57% of the way through the buying process before they pursue “commercial conversations” with a prospective supplier. (CEB/Gartner)
- Buying decisions are made or heavily influenced before a supplier is ever engaged.
- Purchases are made through the lens of a single transaction rather in pursuit of an enterprise strategy
- Significant value is left on the table and supplier-related risk is increased.
Procurement is forced to be a price reducer rather than a value driver and finds themselves swimming against the tide of pre-formed stakeholder preferences.
The Challenge: Procurement Effectiveness as a Business Partner
For procurement to become an effective business partner, they must move beyond the traditional price reducer role. Even when asked to self-assess procurement’s effectiveness as a business partner as seen by different internal functions, a small minority of Chief Procurement Officers rated themselves as excellent:
Sales & Marketing
Since the response options were excellent, fair, poor, and not applicable, most CPOs realize that procurement is seen as a fair or poor internal business partner – or worse still, “not applicable”.
Procurement organizations that successfully adapt to this new normal have one thing in common: they operate like a strategic services business, not a typecast function.
We created the “Procurement, Inc.” framework to help each procurement team become a strategic services business.
Procurement teams who operate as a services business:
- Create value that drives competitive advantage – be it cost optimization, risk mitigation, revenue growth, regulatory compliance or operational agility.
- Have built-in feedback loops that lead to even greater alignment over time – a flywheel that drives the virtuous cycle of continuous procurement improvement.
There are four critical characteristics at the heart of the Procurement, Inc. framework: customer centric, connected, creative and commercially focused. They address the collective opportunity associated with optimizing procurement organizational design and governance, mindset and expertise, decision guides and templates, and enabling technology.
The Opportunity: Scale through Agility
Procurement, Inc. has built in guards against the framework traps of the past. Rather than locking procurement into a one-size-fits all approach, Procurement Inc can be deployed in a number of different ways:
- As an end-to-end procurement transformation engine
- To augment existing procurement process
- To elevate specific category strategies or sourcing projects
Example: A Procurement, Inc. enabled category management and sourcing process:
The Procurement, Inc. Difference
Leading procurement teams use contextualized techniques that enable their company to turn strategic supplier identification and management into a competitive advantage. These techniques – and the skills required to execute them – vary by company:
- Low margin businesses may need cost optimization and margin improvement
- Companies wanting to out-innovate the competition, rely upon the integration of collaborative IP
- Hyper-growth companies demand flexible, scalable contracts that enable speed and support evolving business strategies are a ‘do or die’ requirement.
- Companies in highly regulated industries must meticulously anticipate and head off compliance risk
Through our Procurement. Inc, framework, we help you more deeply understand the objectives of your stakeholders and align procurement performance with their needs.