I have long held the belief that business can get significantly greater value from their procurement activities and by definition, their procurement teams.
Historically, the profession has been driven by transactional behaviours, whether that is the number of procurement projects completed or the volume of tenders managed.
More forward thinking procurement organisations have developed closer links with their supply chain partners and have looked at making their internal processes more efficient. This has coincided with the development of technology within the P2P and SRM arenas.
Within my C.O.S.T. Optimisation Formula, I identified two other areas that need to be considered and integrated within any future operating model for procurement organisation – Change Management and Tracking Benefits.
It was therefore refreshing to read the latest Raconteur Report on Project Management 2015 that reinforced my belief that managing the necessary change resulting from new procurement activities is such a critical step in delivering longer term sustainable value.
I was intrigued to see the correlation between my experiences of the reasons why procurement fails to deliver maximum value to the signs that the report identify for a failing project;
- 40% – change in organisation’s priorities
- 38% – inaccurate requirements gathering
- 30% – opportunities and risks were not defined
- 29% – inadequate sponsor support
- 29% – inaccurate cost estimates
- 25% – poor change management
Source – PMI 2015
Conversely, the report also highlights the fundamentals of effective project management and again, forward thinking procurement leaders need to ensure that these are fully considered;
- Organisations must fully understand the value of project management (read change management and/or procurement)
- Actively engage sponsors – not just at the start of a procurement exercise but right through to completion and embedding the new supply chain structure
- High alignment of projects to strategy – focus on those activities that will move the business forward towards their overall strategic aims
- Standardised project management practices
- Enterprise wide Project Management Office
If you were to honestly assess your organisation right now, how would you measure up to these five core elements?
Completing the procurement task is one small element of the overall sequence of events that ultimately deliver (or not) the value to the organisation. A failure to properly manage the project and the resultant change will significantly dilute the benefits that any procurement organisation delivers.