The Supply Management jobsite

Procurement transformation, a definition

16 May 2011 |
Posted in: Purchasing

A jaunty steel band greeted delegates to the opening session of this year’s Institute for Supply Management (ISM) conference in Orlando. A highly relaxed start to the vast event.

In a surprisingly cool and very rainy Florida – Good Lord I could only sit by the pool for an hour before kick off – highlights on afternoon one, aside from said band, included a new (for me) definition of a procurement transformation “a project that fundamentally alters the capability to improve the achievements or results” and an idea as to when a transformation may be necessary: “When the rate of change inside an organisation is less than that in the outside world, the end is in sight.”

Yikes, that must apply to loads of companies, logic alone should dictate.

One speaker took the line of least resistance and complained about “large consulting firms”, who could he mean? He, who runs a “small consulting firm”, claimed that the savings of consultant-led deals were in 95 per cent of cases not sustainable after three years.

Would SM readers agree with that assessment? Or is it in fact too generous?

3 Responses to “Procurement transformation, a definition”

  1. Is it much too generous!

  2. Sounds like a tough life, Steve.

  3. The answer is “it depends”. This is not a cop out:

    The problem is that many organisatons call in the consultants (particularly the big ones) to conduct the initial transformation and deliver savings. Typically this involves the introduction of a category management approach and strategic sourcing – moving forward in a series of sourcing waves. What is frequently missing is the inclusion of a real SRM focus following the sourcing benefits and the commitment by senior management to resource this area.

    A joint problem is embedding the capabilities in the organisation for after the consultants have gone.

    So handled properly the benefits should be sustainable. What it requires is a real commitment to drive procurement maturity towards best in class. Not just to treat the so called “transformation” as a one off project.

    Who should take the blame for failure – well, we are all familiar with caveat emptor.

Leave a Reply

Notify me on comments