Whole-enterprise procurement: an end to turf wars?

The release of the Civil Service Reform Plan (CCRP) has sparked another interesting debate on the reliably excellent Spend Matters blog with blogger Peter Smith declaring the plan includes a statement about procurement that is ‘extraordinary’.

What Smith sparked was a revival of the debate about the relationship between (professional) Procurement and, in the Public Sector at least, a new ‘rival’ ‘Commissioning’. The CCRP puts into pen and ink an intention to create a Commissioning Academy separate from Procurement and has left some Public Sector procurement professionals wailing in anguish, declaring that the government doesn’t understand procurement and that it is taking away some of its core expertise and giving it to non-professionals. I have no interest in stealing Smith’s thunder here (I suggest you follow the discussion in his blog) but there are wider implications for the procurement profession that I’d like to explore.

In every procurement book under the sun, the importance of aligning procurement to the strategy and objectives of the business is highlighted. A procurement team operating in splendid isolation might cut a few juicy deals, but it’s likely that in doing so they’ll at least irritate their stakeholder colleagues, or worse (if the deal is a bad one), materially and negatively impact the business. Furthermore, if the regulation category or supplier relationship management guidelines are followed, then sourcing and SRM strategies will be best developed via a cross-functional approach. All experience tells us that strategy implementation is also most likely to be successful if procurement and its stakeholders are aligned and working in harmony. So, if the profession accepts that cross-functional working is preferable, then why does it continually get itself in a tangle over who ‘owns’ what?

The CCRP just happens to draw a distinction between procurement and commissioning; others build corporate structures around separating sourcing and contract (and supplier performance) management. Some clients we’ve come across have supplier relationship managers who operate without contract management duties, accountability for which (hopefully) lies elsewhere.

Professional fiefdoms can only thrive and prosper if there are significant barriers to entry, as enjoyed by those practicing law, medicine and the Institute of Surviving High Wire Artists. Procurement, sadly, doesn’t have such a defendable position; a ‘licence to operate’ is not yet required, despite the best endeavours of CIPS to make it so.

My contention is that procurement’s future lies in developing consulting skills; becoming the trusted advisor to the organisation’s service and product users/stakeholders (or shall we say ‘commissioners’?). Procurement needs to become comfortable with sharing its expertise, helping its stakeholders develop into savvy and intelligent customers to their suppliers and service providers, skilled in both technical and commercial aspects of business.

Our organisations are, in truth, agnostic about who owns supplier relationships and category sourcing decisions; it only desires successful and sustainable outcomes that support the wider business objectives. To the CEO, turf disputes are an irritation.

In a blog written earlier this year, I cited at Director of Procurement in the pharma sector who understands that irritation. This procurement leader embraces the notion of giving stakeholders the tools they need to execute their procurement activities, with procurement always positioned to provide support. He passionately believes that genuinely supporting stakeholders requires a deep understanding their needs and, in turn, the needs of the customers functioning downstream. If you hadn’t noticed, a relentless focus on customer value and business impact is the (not so new) name of the game.

Over the past twenty years, we’ve seen the inexorable rise in numbers of procurement professionals, with CIPS worldwide membership now a stone’s throw from 70,000. In the future, however, perhaps we’ll have to begin to contemplate lower numbers of procurement professionals in our organisations.

In those trimmed organisations, these professionals will not only have to demonstrate deep knowledge of the procurement toolkit, they will also be confident consultants, coaches and mentors to their decision-making colleagues. The result will be fewer procurement professionals, but many more competent procurement practitioners. The transition suggested here will undoubtedly take some time, but once the bean-counters get their heads around the idea and ensure accountability for value for money outcomes is placed with those practitioners and not solely with Procurement, then the change will accelerate.

You might say, if this does indeed become the mainstream business model for procurement (with a small ‘p’), then the profession will have played its part in enabling the whole enterprise to become consciously competent in procurement. If this is what it takes to embed successful cross-functional working, then it will be a good thing for business, if less so for some accused of functional empire-building.

by David Atkinson

3 thoughts on "Whole-enterprise procurement: an end to turf wars?"

  1. Peter Smith says:

    Excellent stuff David. Will feature your views on Spend Matters shortly if you don’t mind once I’ve had a bit more rant this week on the topic. I’m with you generally on this, although we may need to make more of a distinction between the different sub-sectors within procurement – direct materials being quite different from services / indirect procurement, retail different again etc. But I’m writing about the impact on CIPS this week and I agree – we may find that this is the high water mark for procurement numbers in the developed world at least. And as you say, that’s not necessarily a bad thing.

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