Peter Smith, Author and Managing Director at Procurement Excellence Ltd. and long time Managing Editor at Spend Matters kicks off a thought-provoking series of blogs focusing on “managing procurement change.” Read more to learn just what this series entails.
In late 2019, when I first spoke to Basware about this series of articles, we were blissfully unaware of what was about to hit the world. Talking then about the outlook for procurement in 2020, our list included the usual priorities around value and operational delivery as well as emerging themes, particularly digitalisation and the wider “procurement with purpose” (sustainability) agenda. And yes, risk and developing robust and resilient supply chains was on the list, but none of us could have guessed quite how fast that would start dominating the thoughts of many professionals.
Managing Procurement Change
However, the theme we decided on for this series – managing procurement change – still has relevance and topicality. Indeed, it may be more important than ever as we navigate through the pandemic and out the other side into a world that is inevitably going to look different.
Some of those developments are already obvious: Using digital tools for remote health or legal consultations, as well as for many (maybe most) business meetings, is not going to disappear. Surplus office space is guaranteed; and business travel category managers might want to find a new category to focus on as soon as possible.
In other areas, we can only speculate. Many organizations will surely consider how the combination of just-in-time strategies, low-cost country sourcing, and supplier reduction programmes has left them vulnerable to geographically distant events. Government will be less sanguine about critical medical items or drugs (and maybe other items, too) for which there is no domestic supply at all. Combined with the potential for trade disputes and barriers in the coming months, as some look to allocate blame for the pandemic, that could have a dramatic impact on globalisation.
Procurement and Supply Chain – the new center stage
Procurement and supply chain professionals will be in the center of these debates and many will be occupied through 2020 and 2021 implementing major changes in the way they approach risk, sourcing, and category management. No doubt there will be change, too, in terms of how technology can support the post-pandemic world, including in procurement, and of course for many organizations there will be opportunities as well as challenges.
The public sector is not immune; indeed, we can already see that entire sectors such as education and health, even justice, could look very different in a surprisingly short period of time. Our theme of managing change seems therefore more relevant than ever.
What will this series discuss?
In this series, we will refer to three broad types of procurement change:
New strategies for procurement, including approaches to risk, category and sourcing management, or supplier management
People-related change, at functional level (e.g. organizational models) or individual (roles, skills and capabilities)
New technology, systems, governance and processes (the “target operating model”)
Some change programmes look to address all of these; some may focus on one area at a time sequentially or simply concentrate on a single major opportunity. But in every case, we will assume the work is aimed at making procurement a more effective contributor to the organization’s achievement of its goals.
Procurement “change” or “transformation”?
But why did we choose to use the word “change” rather than “transformation”? Perhaps transformation has become something of a cliché, and if it means anything, it refers to dramatic and rapid change, which may not even be desirable or possible for many organizations. On the other hand, “change” is a concept that everyone can embrace, and it applies everywhere. But our advice and thoughts here will certainly apply to “transformation” too, if that is your aim.
Change management is now a key capability for most executives, and technology has increased the pace at which most organizations must change if they are to thrive or even survive. Firms and even whole sectors that previously looked secure have been turned upside down by digital disruptors (Tesla, Uber, Amazon). Even in the public sector, maintaining the status quo is no longer seen as an option, as citizens and politicians demand different approaches and compare public service delivery to the leading firms in the private sector.
The pandemic amplifies these existing trends, but it is worth remembering that change is difficult at any time. Why is that? The biggest challenge is almost always people. They worry about losing their jobs, about having to understand new technology or embrace different ways of working. So, while we will talk about technology in these articles, the human side will regularly crop up, too. And we will finish on that note, with the wise and still-relevant words of Machiavelli, from some 500 years ago, describing the difficulty of driving change in his classic work “the Prince”.
“It ought to be remembered that there is nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success, than to take the lead in the introduction of a new order of things. Because the innovator has for enemies all those who have done well under the old conditions, and lukewarm defenders in those who may do well under the new. This coolness arises partly from fear of the opponents, who have the laws on their side, and partly from the incredulity of men, who do not readily believe in new things until they have had a long experience of them.”