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23 December 2019 5 min read

What is the first step in Procurement charting a different course? Mind the ‘Gap’!

Abdi Azimi

Abdi Azimi
Partner | Supply chain and procurement | London

More of the same? Faster? Is it just about trying harder? We don’t think so.

A different approach is needed. One that feels radically different, requires a new vision and ambition... and a healthy dose of bravery.

But what can be so different? Surely all of the ‘ideas’ for Procurement improvement and transformation have already been generated and explored?

We believe the core issue lies in the ‘WHY’ of Procurement, and before this is fixed, all well intentioned initiatives will fall short of delivering the full value that is promised.

How would typical executives respond if asked why Procurement exists in their organisation? Surprisingly the responses to this question haven’t changed much over the last 20 years:

  • Driving savings from supplier arrangements 
  • Managing tender processes to evaluate, shortlist and select suppliers
  • Setting up suppliers in transactional systems so they can be paid
  • Drafting agreement and putting in place terms and conditions
  • Complying with appropriate legislation and procurement regulations.

These, amongst the many other things that Procurement do, are without doubt important activities that are required for the day to day functioning of an any effective organisation. But do they reflect the ambition of the typical Procurement leader?

We believe that there is a significant misalignment between what Procurement want to, and should be, known for and what senior stakeholders see them as. This ‘Perception Gap’ has been allowed to develop over time and is now a critical blocker. What’s more, stakeholder have different and often divergent perceptions of what Procurement should be doing.

Correcting this ‘Perception Gap’ is the fundamental first step that needs to be taken. But it can’t be done by Procurement alone - it needs to be addressed at the top of the tree, driven by the organisation’s leadership team.

We have already outlined in previous blogs the changing and increasingly complex supplier landscape and the level of critical capability that exists outside of organisations. Procurement’s role needs to be aligned directly to how the value, insight, innovation and intelligence of this external capability can be harnessed.

Procurement needs to been seen as a strategic capability at a corporate level. One that can open the metaphorical door for organisations to access all of this potential, and largely untapped value. External suppliers should have a clear voice and input into strategic decisions - their expertise should be sought out relentlessly.

This needs to be the high bar that is set uncompromisingly as a clear commitment - and recognition that this untapped external value can be a key source of strategic advantage.

Organisations that are able to achieve this will reap the rewards. The ones that don’t are destined to be stuck in an indefinite loop of Procurement dissatisfaction.