Blog
Understanding strategy
By Mark Hubbard |
Both Procurement and Sales need to have a good grasp of the customers strategy; one side to make sure they are addressing the core needs of their customers strategy, the other to make sure they are servicing the needs of that strategy.
So, here is the issue; getting to the working parts of a company strategy is less easy than it should be. There are often grand statements and visions, obscure references or detail of simple change programs. Although these items can help us understand, there is often a gap between the statements and the real strategy. Often, the key statements being made by executives about strategy fail to be linked closely into more day to day activity.
This means that both sales and procurement need to spend some time exploring what their customer is aiming to achieve at a high level, and look for the alignment or contribution that a particular area of sales or spend will be able to deliver.
Finding links to the strategy
Clearly, in some areas, the links can be tenuous. As a simple example, where businesses are acquiring office supplies, it can be hard to see the links to strategy. However, even here, it is possible to find links to CSR statements and targets and show linkage in those areas. In other areas, linkages can be far more specific. Where a business is seeking to extend its ability to innovate, and deliver innovation to customers, identifying the way the specific category contributes to that strategic intent can focus both the way in which the procurement activity works, and the approach to a sale.
However, there are often several areas within an overall company strategy, not all of which have the same weight at the same time. This suggests that we also need to judge which areas to prioritise and which may be reasonably ignored. If we talk to stakeholders inside the business, we will get different views of the importance of various areas; a consolidated view is often hard to come across, but testing and challenging this hierarchy is significant.
What can we do if we have a good view of actual company strategy?
From a procurement direction, there is an opportunity to structure business requirements to reflect key elements of strategy. This can move procurement rapidly from tactical activity to a more strategic delivery. From a sales perspective, we can start to target sales linked to the core business issues, rather than a tactical sale. In both cases, this is going to lead to more in depth and longer term approaches (as much as is possible in the particular area) which can lead to extended delivery of benefit for both sides.
What are the risks?
There are dangers in the approach. In organisations with limited development of strategy, changes in direction are a risk. In areas where strategy is emergent (which I translate as based on what we’re doing), there is risk of correction and change as the strategy evolves. However, there is also a likelihood in these cases that strong intervention from either side can firm and inform strategic direction, so the risk is worth taking.
Start out by seeking and clarifying the key areas of strategic intent, and match those to any targets for delivery over time. From here, map the way in which the strategy can be influenced by either the category of purchase or the product / service characteristics.
If we can do that, then we can ensure that we have tight alignment, which gives a far stronger foundation for the sale or purchase activity.
Further reading
Blog post: Procurement strategy and skills-building
Blog post: Category management strategy – Why is it important?
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
