Do you have a Strategic Procurement Operations Team?

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Hi readers,

Back in Montreal just in time for the heat wave this week… Wish me luck! 🥵

📰 In this week’s edition:

• 5 procurement jobs that caught my eye

• Do you have a Strategic Procurement Operations Team?

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ICYMI 👀: My best Linkedin post ever (didn’t post this week - vacation):
$1 saved by Procurement is the same as $10 in additional sales…

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🌙 Sunday Night Note

Do you have a Strategic Procurement Operations Team?

The role of a Category Manager (or Sourcing Manager) has become more complex over the last few years. Increasingly, we are expecting Category Manager to be knowledgeable and skilled in:

• Risk management

• Process management

• Project management

• Quality management

• Change management

• Organizational resiliency

• Digital literacy

• Sustainability principles

• Innovation and continuous improvement

This is in addition to being well versed in their traditional responsibilities of ensuring security of supply and finding savings by leveraging deep category expertise…

Unfortunately, Deloitte’s 2023 CPO Survey¹ tells us that a measly 10% of leaders (“orchestrators of value”) and 3% of followers feel they have all the skills needed to deliver on their strategies.

That’s approximately 17/350 (or 4.8%) of organizations surveyed across 40 countries! Organizations who have a team of Category Managers that pull all of these skills together are lucky as hell…

Read: If you’re a Category Manager with this full skill set, you should be paid top dollar because you’re a rare commodity!

For everyone else, this means you have a few options:

1. Get in a bidding war for this top talent.

2. Develop you’re people internally.

3. Rethink your organizational structure/operating model.

Number 1 is cost prohibitive for most procurement organizations.

• And it’s an unsustainable race to the bottom… Or to the “top $” in this case. There’s always someone out there paying more than you.

Number 2 is necessary but not sufficient.

• Yes, in a talent shortage context, you absolutely need to be developing your folks with the skills they (and you) need to succeed… You can’t rely on “the market” to provide the skills you need, as evidenced above… People with the right skills are rare.

• However, there comes a point where the barrier to entry to be a skilled Category Manager becomes prohibitive (The lead time for your Category Managers to acquire the needed skills is too long. You need a competent team NOW!).

That’s where Number 3 comes in…. Rethinking how work is organized in your operating model.

• If you have to wait for Category Managers to gain all the skills required for success listed above, you have lower organizational performance, operational risks and burnout risks due to feelings of inadequacy / work overload. Resources who don’t have the skills needed to meet expectations (and are more than a stretch assignment away from developing them…) won’t stay with you very long…

• So, how can we modernize the procurement organizational structure to eliminate dependency on rock stars while increasing organizational performance and resiliency?

The answer? Strategic Procurement Operations

What is Strategic Procurement Operations?

The end-to-end Procurement process is typically separated into 2 parts:

• Strategic Procurement (or Source-to-Contract)

• Operational Procurement (or Procure-to-Pay)

A centralized (or center-led) procurement team is generally divided along these lines so that one team can concentrate on strategy while the other takes care of day-to-day purchasing operations and logistics.

With everything that’s now being asked of Category Managers, a new subdivision is needed in the Strategic Procurement portion of the process.

Category Managers need to be able to focus on building deep expertise in their traditional skillset (Category Expertise, Spend Analysis, Category Management, Sourcing, Contract Management, Supplier Relationship Management, etc.) while building a summary understanding of the other skill areas listed at the beginning of this article.

For deep expertise in these other skillsets, you need dedicated Strategic Procurement Operations roles, especially as you ramp up your digital transformation efforts. Your Strategic Procurement Operations team should be responsible for building deep expertise in “new era skills” first and Procurement expertise as a second priority to act as a “support sub-function” to your Category Managers.

• Category Managers want to change how a cloud Procurement tool works? Call Strategic Procurement Operations.

• Category Managers need support with a spend analysis? Call Strategic Procurement Operations.

• Category Managers want their sourcing project to fit into the overall sustainable procurement strategy? Call Strategic Procurement Operations.

• Category Managers want support for how to deal with a difficult internal client? Call Strategic Procurement Operations.

• Category Managers needs to determine how to operationalize a new contract (e.g. purchasing channel)? Call Strategic Procurement Operations.

Inversely, Strategic Procurement Operations can be mandated with function-wide objectives that are typically hard to implement when you depend on a team of Category Managers:

• Want to rationalize your purchasing channels?

• Want to deploy catalogs cross-categories?

• Want to put in place a cross-category third party risk management framework?

Call Strategic Procurement Operations.

The reasons for creating a team tasked with these “new era skills” and objectives directly within your team are simple…

1. You could depend on other functions (IT, Project Management Office, Risk, etc.), but these people typically don’t know procurement well enough to be effective… Everything falls back to the category management team.

2. It’s increasingly unreasonable to ask your category teams to develop and maintain adequate skill levels in all the skills listed above. They don’t have the bandwidth to do everything you need today.

If you truly want high performance, find folks with the required “generic skills” above and have them learn Procurement to the level needed for effectiveness.

This is much easier and more realistic than expecting procurement professionals to widen their skillset to cover everything that’s needed.

What do you think? Leave a comment with your thoughts below 👇

💭 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.