Sourcing & procurement has long endeavored to be a strategic partner to business. While this is a noble objective, in most cases it fails miserably for the very same reason that many sourcing and procurement-led initiatives fail. Lack of the right leadership mindset
What is Wrong
Fundamentally, sourcing organizations are focused on savings. With this approach, the value they purport to deliver is year-over-year savings. Their very existence relies upon saving more than the department “bills” in chargeback to the business. Many times, for example, the focus on savings is counter to the business strategy they are supposed serve. A focus on savings during a period of growth may not be appropriate when the business priority is speed-to-market. In fact, an exclusive focus on savings may encumber a merger or acquisition.
Furthermore, sourcing and procurement procedures are rarely straightforward or designed with the customer in mind. Historically, sourcing and procurement policy is a hybrid of finance and compliance functions rather than an enabler of business.
Right the Ship
A business minded, customer-oriented CPO is the ideal first step.
“An army of deer led by a lion is more to be feared than an army of lions led by a deer.”
Chabrias – 410-375 B.C.
With the right leadership, the organization must rally about a defined purpose: a mission that guides daily activities leading to a broader strategy coupled with the agility to change with the business. The mission is as dynamic as the business it supports. For example, an effective CPO has relationships with peers, participating in and contributing to their objectives during annual planning. For example, in anticipation of a merger, the CPO may commission his key leaders to focus on risk mitigation, subrogating savings for the more pressing cause.
An effective partnership between sourcing and procurement has its genus in relationships starting at the most senior level and propagating throughout. A business-mindset that is able to shift focus with business priorities can’t be understated.