Procurement transformation

Procurement transformation is a strategic process that involves changing the way a company procures goods and services. It typically involves a comprehensive overhaul of procurement processes, policies, and systems in order to achieve a more efficient and effective procurement function.

The goals of procurement transformation can vary depending on the specific needs of the company, but may include:

Cost savings: By optimizing procurement processes and negotiating better prices with vendors, a company can reduce the overall cost of goods and services.

Improved supplier relationships: By developing stronger relationships with suppliers, a company can ensure a reliable supply of high-quality goods and services.

Increased efficiency: By streamlining procurement processes and automating tasks, a company can reduce the amount of time and resources required to complete procurement tasks.

Enhanced visibility: By implementing better procurement analytics and reporting, a company can gain greater visibility into their spending and identify areas for improvement.

Procurement transformation typically involves a collaborative effort between procurement, finance, and other departments within the company. It may require changes to the company's culture, processes, and technology, and may take several years to fully implement. However, the benefits of procurement transformation can be significant and can help a company achieve a competitive advantage in their industry.

At present, the general perspective of others on procurement functions, people, process, and technology has been changed. Even it’s changing slowly, and a drastic change depends on the way procurement professionals demonstrate their visible and nonvisible values to their internal customers.

The transformation of people and process is key for any companies to stay efficient and competitive, both having their challenges but nothing like experiencing way much better than what we use to had before transformation.

Drastic change in others’ perspective about procurement depends on the procurement professional’s high performance on their expected deliverables to the business apart from cost savings and simplified effective process that clear the issues. Technology frees up energy on nonvalue-added activities.

Let’s understand what needs to be done in the case of people, process and technology to change the general perception of others on the procurement function and help to transform procurement functions to be value-added business partner.

Here we will see how the procurement transformations can be carried out regardless of the size of the company and different business segments and models.

From my experience, procurement transformation journey can be divided into four main steps: initiating, performing, maintaining, and delivering. I have led many procurement transformations following these steps, which brings me promising results as well. Just remember one thing, time frame for each step depends on your company’s overall maturity level in procurement function and type of the organization you are in.

Hence, before initiating the procurement transformation, I advise to have a thorough self-assessment to know your maturity level on main and micro-level deliverables that are expected in these steps and get your validated transformation plan with your management.

Key ingredients of procurement transformation:

Following are some of the key ingredients which help and are required for a successful execution of procurement transformation.

Agility: The ability to move about quickly and easily. World-class footballers in a world class team have the combination of speed and agility right!

Customer centric: Putting your customers and their needs at the heart of your vision. “Get closer than ever to your customers. So close that you tell them what they need well before they realize it themselves.” – Steve Jobs

Purpose: Having meaningful initiatives and clarity about each transformational action, clear road map and expected success by sharing the same intention regarding other functions. Clarity is about understanding how processable your communication is.

Common language: Making the transformation plan simply understandable, spoken and written by everyone.

Fearless leaders: Transformational leaders process energy, seek outgrowth opportunities, have no fear of failure, take calculated risks, can take quick decisions, trust their instinct and learn from their mistakes.

Talent potential: Assessing and setting the maturity level at good level on all needed competencies to run the transformation successfully.