Procurement organizations cannot operate without a strategic underpinning – in fact, it’s likely more important for procurement to develop and maintain a clear strategic method than it is for many other groups. The reason for this lies in the dynamic nature of the procurement role within a firm. In a realistic sense, procurement practitioners are the ultimate internal consultant, and as such, need to be reactive, agile, and prepared for opportunities and challenges as they present themselves.
What makes this realization somewhat obscured is the fact that many teams can lean into the roles prepared for them within an organization; their goals are naturally suited for “classical” strategy wherein the optimal path lies in doubling down on core competencies and working to continually optimize their specific position, rather than innovate or analyze. The firm-equivalent to these traditional groups would be an industry titan whose market and industry context is characterized by a resistance to change and predictability, thus the ideal path for development lies in deepening core competencies to more efficiently carry out operations at scale within a relatively stable environment.
In contrast to such firms, consulting firms stake their ability to provide value to customers on their ability to adapt to dynamic circumstances and evolving markets. Though they do tend to operate in the face of a strong resistance to change, this resistance is rarely, from the consultant perspective, taking place in a stable environment. In response to this, consultant firm adaptation takes the form of constant analysis, proactive engagement, and leveraging their perpetual “outsider” perspective to identify inefficiency across multiple industries, firms, and work groups. This is done in order to dynamically modulate their strategy for both acquiring new customers and consistently generate new solutions and innovations to service those customers.
Similarly, in order to function as effective “consultants” (peers) to their “customers” (internal stakeholders), it is necessary that procurement practitioners analyze their “market” (in the form of all aspects of the company in which they are involved) and continuously search for and identify value-add scenarios to be pitched to these customers. This is done in the hope of landing them as clients, and thus being granted the opportunity to collaborate by tailoring one of their many “service offerings” (core competencies), such as sourcing, contract negotiation, vendor or risk management, etc., all the while leveraging the consultant perspective as a relative outsider to provide a fresh, efficiency-minded viewpoint on the current, project-relevant procedures.
Focusing-in on the analogy of the consulting engagement, let’s take a closer look from the perspective of a consulting firm preparing to work with a new client. Though their engagement implies that the client has seen potential in the initial value-add proposition identified, they still must prepare internally by developing a project strategy to be followed during the engagement – the “how” must follow the “what” – and action requires strategy.
As any consultant can tell you, the first step to an engagement lies in analytics. Developing a deep understanding of the value that can be captured with a substantial evaluation of the circumstance is required. Moving back to the procurement side of this analogy (though not uncommon on the consulting side as well), a great first analytical tool to consider leveraging at this point would be the infamous “Balanced Scorecard”. By laying out the needs of the customer (stakeholder), the financial constraints of the business, the resource needs and time constraints of your team, and perhaps most vitally, the potential areas for innovation and future improvement, a clear picture of the goals and measures necessary to take decisive action on behalf of a stakeholder will come into focus.
Though the Balanced Scorecard is just one of many analytical tools, it serves as an example of what results can be expected from the analysis. The procurement team will have a clear dataset (to be augmented by the project results) to add to their growing knowledge-base of project results, which they may draw upon in the future when further developing their business contribution plan. With this evolving dataset in hand, the team will be able to review a record of the value their organization offers, and begin to plan how they can continually bring that value (and more) to both past and future stakeholders, while avoiding any pitfalls they have experienced along the way – in other words: an adaptive strategy for the procurement consultant.
