Blog
Defining Strategic Procurement
By Mark Hubbard |
A recent post asked for a view of what strategic procurement means to people.
There was a range of replies to defining strategic procurement but the most significant impact in this house was the need to sit back and think more deeply about what this short phrase means. We hear it a lot, but defining it isn’t easy.
We can set up a comparator by assuming that strategic procurement is not tactical procurement. However, that very comparison leads us to a fundamental insight: if procuring tactically is the current business strategy, then tactical procurement is strategic. Clearly, the wise would say that tactical procurement can never be the strategy. However, right now we are surrounded by a whole host of decisions in procurement which are about business survival, about securing products which are in short supply, about offsetting contracts where we no longer need the previously required volumes, and more. Fixing stuff has become the business strategy, and procurement is there, pushing and shoving to get to the best outcome it can.
This leads us to defining strategic procurement
Perhaps it is a procurement approach which focuses on delivering some part (or much) of a business strategy. If our underlying business strategy is about growth, then strategic procurement would be aiming to deliver the suppliers and supply chain best able to maximise that growth. If we were about net-zero carbon, procurement would be tirelessly building that requirement into its decision-making (alongside financial targets and operational stability).
This leads to the next challenge; how useable is our business strategy?
For many, there is the underlying problem of finding out what the strategy is in a way that we can act upon it. Some organisations struggle with this and find it better to hide the strategy from its people, less they become confused by it or tell the competition what it is. Others have an available strategy, but don’t focus on it yet as other things are more important. Still, more have strategies which, once examined, don’t appear to be very practical or implementable or, indeed, relevant.
We may have a role here. To deliver truly strategic procurement, we may have to analyse and challenge the strategy and parse it so we know what it means, and what that, in turn, might mean for our procurement activity, or our category strategy.
If we can do this well, we can then move forwards and start to pivot the procurement output, so it is demonstrably delivering the business strategy. As the business focus changes, we need to be alert to that and ensure that our approach matches the business change and that it happens at the right speed for the rest of the business.
On occasion, we may find ourselves in a place where the business strategy is lacking. In these cases, we may need to help with the work required to uplift strategy so that it is useable, and perhaps so that it aligns more with the marketplace.
In all these cases, we need to have a workable business strategy to be able to respond with a strategic procurement approach.
If we are not working to deliver the business strategy, then whose strategy are we trying to support?
About Mark Hubbard
Director
30+ years experience in procurement and supplier management, in line and consulting roles
Previous employment: Positive Purchasing Ltd, SITA,
QP Group, BMW, SWWS, Rover
Education: BSc in Engineering Metallurgy, MBA University of Plymouth
CIPS: Member
