Updated: Jul 31, 2019
Following on from Part 1 - The second factor is “Competency” and relates to both the people involved in procurement and the competency of the organisation. Often companies talk of people being their most important asset, however in the procurement environment this is especially true. It is often the lost opportunity of not having the best people in position that is the real cost to the organisation. Many people are “busy”, however how many of them are busy adding real value? -we call this competency “Drive and Determination”, although we have all met people that “get things done” in the short term although leave a “trail of destruction” in terms of broken relationships and undermined trust. We clearly need to have people in place that demonstrate both “Drive and Determination” as well as “Influence and Communication” (the second of the defined competencies). In total, the research has identified 10 competencies that are key to success in a procurement environment and assessing existing staff against a suitable skills, knowledge and competency framework is therefore a must for the new CPO. Knowing the capability of the team in a scientific way will lead on to better recruitment and development decisions being made. At the end of the day it is the team (not the CPO) who will deliver the results.
Having an “Effective strategy” is the third factor, which assesses the approach being taken by the existing procurement function and will include total acquisition cost, supplier relationship management, supplier risk management etc. This is an area that has typically been the focus of attention within transformation activity, although evidence suggests that this area is still immature in application as seen by the overuse and misuse of phrases such as “Strategic Partner” where the language used differs from the approach taken and this rhetoric undermines trust within the supply chain leading to “game playing” and poor supplier customer relationships. It is essential that the new CPO reviews the supply strategies in order to ensure that these are focused on the requirements of the business.
“Communication, Marketing and Data” is the fourth factor and looks at the effective communication of programme imperatives, data management, stakeholder management and expectation management. There is a real dilemma for some procurement practitioners – in order to get support for the investment in the procurement function, big saving numbers are often identified (without the necessary reality checks being implemented). This can lead to disappointment from the executive sponsors when the numbers delivered are less than initially “sold” in order to get the necessary backing. The key therefore is to set realistic expectations, an manage accordingly with open communication and good data.
The final dimension looks at “Effective Governance” and relates to having an effective and independent measure of performance within the programme. It is good practice to have a direct link to the CFO, so that delivered benefits are seen as real in the eyes of the finance department and other stakeholders. It is often the case that the numbers presented from the procurement function are not believed as there is either weak governance or too much distance from the procurement activity to their own reality. This can result in a lack of credibility and poor levels of support, however this can be reversed where the governance is strong and integrated to the business activity – The implementation of strong governance is therefore essential in the short term.
As per Napoleon’s experience, much can be achieved in the first 100 days, although hopefully when the new CPO approaches this is the right way it will result in success for the individual as well as the organisation – rather than in exile to St Helena!
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