Procurement Assessments Need to Make a Comeback

Editor’s Note: James M. Baehr is Group Lead / Founder of Sourcing Strategies Group LLC

Surveys of Chief Procurement Officers (CPOs) tell us Procurement organizations continue to do better year over year across key dimensions of performance. There are some exceptions where CPO's indicate room for improvement but generally the arrows are pointing up. These surveys are undoubtedly important in measuring the continued development of Supply Management across businesses from around the globe and from large to small.

They're professionally done, insightful and surely helpful to the readers.

But, there's typically an interesting statement embedded to the effect these surveys provide a benchmark of the sentiment of procurement leaders. Does this mean the responses reflect the CPO's self-assessment of her or his organization? Does the responder complete the survey independently? Does she or he call together their team to answer the questions as a collective? Do they query their peers at conferences or other functions and then draw comparisons … “we're as good as those guys, maybe better, so this is how I'll answer the question”?

To be sure, these queries about how responses are arrived at are deliberately provocative, but for good reason. Approximately 75% of the responses come from companies or public entities with somewhere under $10 billion in annual turnover. These are companies, for the most part, that are trying to better understand and master the science and art of Supply Management. When procurement executives answer these questions do they really know how well they are, or are not, doing?

Again, before going further, surveys are representative of a remarkable effort by those who respond, those who prepare the results, those who interpret the data, and those who prepare the summary report. These reports and their insights are essential to gauging the performance and progress of our profession.

The support of executive leadership and collaboration are two dimensions that consistently show up as priorities in most surveys. Rightfully so. It's important to please your boss and just as important to please your internal customers. But, once more, how do you really know how you're doing? Surveys? Report cards? Intuition? Anecdotal? All the above? Does the group use self-assessment tools? Agreed that self-assessments can be useful in that they give you some sense of how your group is performing. Next question - are they credible? Will the business leadership accept the results? Will internal customers accept the results?

While self-assessments are okay, wouldn't it be better to have an independent assessment? In the early days of procurement transformation or, if you will the beginnings of Supply Management, the process of knowing just how good you were at procurement started with an assessment of some type. There were brown paper process exercises. There were surveys. There were interviews of the procurement staff. There were interviews of customers. There were interviews of senior management. These sessions were unnerving and consequently challenged or sometimes flat out resisted by the established procurement professionals and their managers. The process was intimidating, and the results were time and again painful.

In fairness, in our current environment, there are tools that enable the assessment of procurement talent, procurement system technologies and procurement processes. These tools are useful and meet a specific need. However, often they're applied independently resulting in an agnostic rather than all-inclusive view of the current state of the procurement organization.

So, what happened to assessments? Where did they go? Or, better still, isn't it time they return? Several years ago, one could look on the web and find reports or presentations on the outcomes of assessments, mostly in the public sector. Look now and you'll find little such information. Understood that some of this may be attributable to the fact that Supply Management can be a competitive differentiator, so the information is held tightly but, one would expect to find at least some declarations of success coming from an assessment. Hopefully, this noticeable absence isn't an indication that organizations believe procurement has matured to the point where assessments no longer useful.

Outside of providing sound responses to the next annual CPO survey there are some reasons why a Supply Management leader should consider an assessment. Let's start with if you've never done one, you're overdue. If you launched a transformation a few years ago and finished the process, how did you do? Is there room for improvement? If you recently merged companies and procurement groups, what are the synergies and what are the differences? If your company has grown organically and significantly over the past several years maybe it's time to think of procurement holistically rather than as an ad hoc function. In all these cases, you should do an assessment.
There are a number of crucial scenarios for considering an assessment. The following are four of them:

• The transition to a new workforce - the reality is that change in the workforce from a majority comprised of established professionals to majority of emerging professionals is underway and happening fast. While this change is driven by conditions beyond control the resulting matter is that the leader needs to address transition. Transition is a psychological process through which people come to terms with a new situation, adjust and adapt. It's clear the emerging workforce doesn't want to do things the old way. They want to embrace new ways supported by their education, modern procurement practices and technologies. An assessment will show where you are and enable the leader to determine the changes needed to transition to the new environment.
• Branding or rebranding - there seems to be growing interest in these concepts driven by the need to either establish an image or to disassociate from a negative one. If you're thinking about branding or rebranding, it's important to recognize authentic brands are generated from a deliberate and methodical process that's very much the functional equivalent of doing an assessment.
• Management support and customer credibility - these essentials were mentioned earlier. If you want both support and credibility, it's imperative to have an honest view and clear understanding where you and your group stand with your stakeholders. This can come through an independent assessment where internal customers are directly engaged in an open and candid dialogue of perceptions, realities and impact.
• Transformation - if, as a Supply Management leader, you've looked at your group and obviously believe that you can do better - overall - the journey begins with an assessment.
A well-done assessment will cover the elements of People, Process and Technology. It will provide a comprehensive review of where you are as a provider of Supply Management for your company. Some will include benchmarks which are helpful but, it's the input of your stakeholders that truly determines if you're doing or not the job to their satisfaction. And, there's good news for smaller companies or public entities - the assessment process is scalable.

Keeping it simple - you can't determine where you want to go until you first know where you are.

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