Procurement Maturity - how to deliver it

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In today’s piece, I’m showing you how to get from stage 3 to 4 of the Procurement maturity model and the order with which you should focus on the key elements.

In a typical Procurement Maturity model, this is about moving from Foundation Stage to Embedded Procurement:

1. Team

A common misconception is you need a big team in place from the start.

You don’t necessarily need to focus on team size, but definitely need to focus on team capability.

If you haven’t got the right skillsets or attitudes within your team, this will undermine all your efforts to deliver embedded Procurement.

Deal with issues fast now, rather letting them fester. If this means having to exit individuals who are stuck with legacy ways of working, this is exactly what’s required for the greater good of the function.

Have a plan for growing the team and communicate this up front with the CFO of the business, but only scale out once delivery becomes embedded.

2. Procurement Policy and 3 year strategy

I’ve deliberately linked these two.

Drafting a Procurement Policy and then cascading it to the business is meaningless if you’ve not communicated the ‘why’ with a vision of what success will look like.

In any business where I’ve had to set up a Procurement Function from scratch, I’ve also made it my business to get in front of the Executive Leadership Team at the end of the first 90 days to get full endorsement of the strategy.

Why is this important? Because only once you have buy in from the very top, can you be confident your policy will be endorsed by them, and therefore embedded across the business.

You then can use the Exec Leadership Team (if necessary) to help communicate the policy too.

3. Organisation Scope

In this context I mean the organisation of Procurement projects.

This has to come only once the policy has been defined.

So, where are you targeting your coverage. Is it UK centric with a global rollout to follow?

Are you prioritising new spend investments first with your Procurement input?

How are you tackling tail spend and do you have a self service framework set up for spend below a certain threshold?

I know what you’re thinking, I’ve just asked questions here without defining the answers. But you can’t move from phase 3 to phase 4 (foundation to embedded Procurement) without having clear answers to these questions.

This then sets the parameters for how and what you’ll work on within the next 6-12months (and also feeds back into the resource plan laid out in step 1).

How soon you need to bring on extra Procurement Managers will depend on your scope and how this will evolve.

4. Tools and Templates

You cannot deliver an effective Procurement environment and embed it within a business without also empowering your stakeholders to Procure effectively themselves.

You’re ultimately only as effective as the impact and influence you have within the business and without empowering the people within the organisation to Procure effectively themselves, you will be limited by the number of hours you can put in.

I always advocate for a strong, dynamic and engaging Procurement Intranet site where you not only provide people further context for what you do but you have a suite of templates available for the business, e.g.

• RFx docs

• Negotiation Tips and Planning Tools

• Legal docs available (standard T’s & C’s, NDAs etc...)

• Glossary of Terms / breakdown of any acronyms to help with understanding.

• Process flows.

Give the stakeholders the tools to succeed.

5. Key Performance Metrics

You can’t get to stage 5, all the value add stuff, without clearly delivering on stage 4.

But not only do you need this to be well defined, it’s essential you have an activity tracker set up recording all the benefits and a way of providing these in a clear dashboard on a monthly basis.

Bonus tip - don’t display savings as ‘Procurement delivery’, get stakeholders on board by talking about savings as Business Delivery.

Remember, your goal is not to deliver ego driven results, but to spread your influence within the business.

You can only do this by building a partnership approach.

6. Systems

This is where you lay down the groundwork with you need.

Maybe the business doesn’t have all the tech or investment available to support you right now, but back to point 2, your 3 year strategy must have clearly outlined what’s needed to get from stage 4-5 (embedded to Strategic).

As a bare minimum a good robust Contract Management System and P2P system to underpin your processes must be on the roadmap.

It’s not impossible to deliver a transition from stage 3 to 4 without good tech, but tech will make your life exponentially easier so you need to have laid down a good plan of what you need.

There’s also plenty of good systems out there for relatively small sums of money.

I hope this helps.

Let me know any questions in the comments.

Tom

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