3 Points for Procurement to Consider as a Modern Organization

How can procurement define itself as a modern procurement organization?

Recently at Iasta reSource 2014 in Indianapolis, Selectica’s Erick Mott had the opportunity to interview Marc Hochman of A.T. Kearney about his session on Supply Team 2020.

During the interview, Marc shared three key takeaways for procurement teams to consider as a modern organization:

  1. Procurement has a huge opportunity to deliver value to their organization.
  2. Procurement needs to collaborate and use the same “language” as our colleagues in Finance and Operations.
  3. Procurement needs to be held to the same standards of performance in terms of how we’re measured and how our contributions are viewed.

Marc’s session included details based on the Return on Supply Management Assets (ROSMASM) model, including the following seven value drivers for procurement:

1-Spend coverage: Is the reach and role of procurement clear, established, and effective across all spend categories?

2-Velocity: Are the spend categories being addressed with the right frequencies and cycle times?

3-Category yields: Does the procurement team deliver competitive savings benefits from their sourcing projects?

4-Compliance: Are compliance policies and practices enabling the full capture of contracted benefits?

5-Additional benefits: Is procurement able to secure tangible financial benefits beyond unit cost reductions?

6-Period costs: Are your procurement resource mix, scale, and costs aligned to deliver competitive results efficiently?

7-Structural investment: Have you made the right long-term capital investments in your procurement team?

Marc also shared the following insights during his presentation:

Adoption of Procurement Performance Management (PPM) is accelerating among CPO organizations. Adoption has increased from 40% in 2011 to 62% in 2014. This is a long way from the 100% adoption of performance management tools that other functions have, but it is increasing quickly!

Visibility and performance reporting will help with talent management. Celebrating stronger athletes as they develop, grow, and deliver (and making them visible) will help drive interest in the profession. No talented millennial that has been polished by his or her baby boomer parents will be excited or satisfied without the opportunity to be known and celebrated….and why would they?

For more key takeaways from Marc’s session, check out this blog post.

Still quiet here.sas

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