Finding the Right Fit and Function for Your Procurement Vision
Most procurement departments would agree that introducing a category management structure is a good way to secure the best-in-class status they crave. On the tactical-to-strategic spectrum, it’s still a notch below “trusted adviser” status, but it’s several more notches removed from reactive purchasing and the three-bid-and-buy mentality. While they’ve largely got a consistent end goal, procurement departments vary wildly when it comes to progress.
Many are still hard at work introducing even a foundational level of strategy. Others are mired in damage control after trying and failing to build a more strategic procurement function. Even those exemplary departments that can call category management a next step have a lot of work ahead. Like their less advanced peers, they’ve got to change their organization’s mindset if they want to truly transform procurement. To transform the function, they’ve got to first change the way other business units perceive and engage it.
The typical “pie in the sky” goal for procurement is a full-blown structure for category management. In simple terms, procurement has become a category manager when it has properly segmented roles and responsibilities — between transactional and strategic — both within its own ranks and in relation to the organization as a whole. At this point, the function will also have secured total visibility into its spend at both the supplier and contract levels. Both its new roles and new level of visibility will empower the procurement team to establish category plans for addressing its spend category by category.
While this has proven an effective approach for many organizations, some are able to work more efficiently as a Procurement Business Partner, which leverages the typical category management framework at the business unit level. Depending on the organization’s size, procurement might simply provide transactional support. More often, however, it will serve as a go-to resource to support marketing, IT and other departments with everything from supplier identification to contract development and ongoing management.
In a category management structure, the procurement resource is expected to serve as an expert in a particular subject area. Procurement Business Partnerships, on the other hand, require procurement to learn the ins and outs of a particular unit, but will mostly see the function fall on its own core competencies.
The partnership puts the onus on the procurement resource to execute its processes effectively while building an in-depth understanding of its partner’s goals and requirements. Armed with dual expertise, they’ll successfully identify the right suppliers and optimize spend management within the category. In other words, they’ll engage in a true partnership where both parties work in tandem to carry out strategic initiatives.
Most importantly, this approach promotes relationship building and can lead to the following benefits:
- More effective, less exception-based processes — the procurement partner interprets the policy and process based on the business unit to evolve them without breaking any rules.
- Quicker cycle times and fewer missed deadlines: If marketing, for example, needs their contracts within three weeks, the procurement resource will attend to this and plan for it, again ensuring a true support model that allows the business unit to focus on its own strategic initiatives.
- Better supplier relationship management: Different business units have different needs when it comes to optimizing relationships. The Procurement Business Partner will understand the best practices for these relationships as well those for longer-term, more strategic relationships.
Ultimately, the Procurement Business Partner and the business unit will develop a strong, mutually beneficial relationship that contributes to the health of the entire enterprise.
Jennifer Ulrich, Director, Procurement, at Corcentric, has over a decade of consulting experience, with a focus on Procurement and Category Management. She has successfully led large-scale initiatives for both direct and indirect spend categories in industries including biotech, medical devices, pharmaceuticals and consumer packaged goods.