The 2 Most Important Questions in Procurement

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Hi readers,

I’m writing to you from beautiful Vancouver, Canada this week. It is absolutely gorgeous. If you’ve never been, I highly recommend coming to visit for the food, the sights, the ocean and time in nature (the trees are HUGE! 🌳😅).

📰 In this week’s edition:

• 5 procurement jobs that caught my eye

• The 2 most important questions in Procurement

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ICYMI 👀: My best Linkedin post of the week:
Sometimes, implementing Procurement systems is about making things harder for yourself. And that's a good thing…. Wait, what?

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🌙 Sunday Night Note

The 2 Most Important Questions in Procurement

Modern procurement is synonym with too many priorities…

Our organizations are asking us to do more than ever before:

• Third party risk management

• Diversity strategies

• Sustainable procurement plans

• Innovation

• Etc.

..all while delivering on the 'traditional' priorities of supply assurance and savings.

This is both a blessing and a risk for Procurement organizations. On the one hand, Procurement can generate more value for the organization. On the other, it risks spreading itself too thin, lessening its impact.

It’s a delicate balancing act that requires careful consideration.

That’s why, at the strategic level (CPO and direct reports), the 2 most important questions you should regularly be asking yourself are:

1/ What are we doing to safeguard the value the function is currently producing?

Actions that answer this question should include:

• Succession planning for all your key roles

  • Who is/are in training to take over key roles (have backups)?

  • How are we building in “redundancy” in the team?

• Career development plans for all team members

  • How is everyone working towards higher personal/professional maturity?

  • Who is responsible for the plan of every team member (e.g. manager)?

  • Who is responsible for giving each team member alternative viewpoints (eg. mentor)?

  • How do all career development plans tie into the overall succession plan?

• Formal (but minimal) documentation

  • How are we capturing and documenting key institutional knowledge, processes, rationale and decisions?

  • Who is responsible for managing this and keeping it alive?

• Automation of key processes via systems

  • What systems do we have in place to institutionalize key processes?

  • Where are we dependent on “key punching” and “heroes”?

Question #1 is all about ensuring your "card castle" won't be blown to pieces when the first flurry arrives (because it is a case of when, not if...).

It’s all about building resiliency and redundancy into your function to safeguard your value production capabilities.

This first question is an “inward facing” question.

2/ What are we doing to increase the value produced by the function?

To properly answer this question, you need a deep understanding of your business, stakeholders and what's important to them.

Why?

You can't define value for the business (e.g. shove “savings” as a definition of value down their throat…). “Value” needs to jointly defined with stakeholders based on the reality of their function within your business model and context.

Yes, even is you have a strong CXO-backed mandate for centralized procurement…

This means answering:

• How are we building trust with our key stakeholders?

  • What steps are you taking to understand their reality?

  • How are you demonstrating that you understand their reality?

  • What signs have stakeholders given you to acknowledge that you understand their reality/have their trust?

• What are the key value drivers for each key stakeholder group?

  • Is it machine uptime?

  • Is it after-sales service?

  • Is it short lead times?

  • Is it very good customer service?

  • What have you done to figure this out and validate it with stakeholders? (pro tip: ask them 😅)

• How do we reconcile this with our own procurement objectives?

  • If we have savings targets, how do we achieve these without compromising on stakeholders objectives?

  • If it’s not possible, how are we identifying and escalating this to management for a ‘tradeoff decision’?

• What new capabilities (skills, processes, systems, etc.) are we investing in to create new “value streams” for the business?

  • Where is digitalization needed?

  • Where are new processes needed?

  • Where are new skills needed?

    • How do we develop these skills?

This second question is an “outward facing” question.

In both cases, these questions are designed to get you thinking about how procurement is maximizing VALUE for the organization.

After you’ve done this, you’ll be in a much better headspace to prioritize initiatives. And if you’ve got to many on the go, you’ll know which ones to pause and which ones to focus on (hint: the ones that generate the most value!).

This isn’t always easy to calculate in dollars and cents short term but the sign of a mature procurement department is that you’ll be able to trust your gut most of the time (and you’ll be right).

If you're not thinking about your procurement function in terms of value, you're probably working on the wrong things right now…

Value (preservation and generation) is the name of the game!

Am I missing any questions? Let me know in the comments 👇

💭 Quote of the Week

🌯 That’s a Wrap…

When you’re ready, here are 3 ways I can help:

1. Pure Procurement Premium. Get access to Deep Dive guides and templates that help you get digital procurement right.

2. Work with me. I’ve been helping global procurement teams digitalize their processes and practices for 12+ years.

3. Reach 8000+ Pure Procurement readers. You have something to share with digitally-minded procurement professionals? Get in touch.

Till next time,

— Joël Collin-Demers

P.S. Please rate today’s newsletter.
Reading your responses is the highlight of my week.