Three Steps to Integrating Continuous Improvement Into Your Procurement Organization’s DNA

Editor’s Note: This is a guest feature written by Paul Mandell, Founder & CEO of Consero

Large companies across the globe are under constant pressure to operate with greater efficiency and productivity, and this pressure is particularly palpable within large procurement operations. While some procurement leaders pursue one-time breakthroughs that hold the promise of permanent operational transformation, most discover that the pursuit of improved organizational performance is an incremental, perpetual activity. Weaving a strategy of continuous improvement int the fabric of the procurement function is an important evolutionary step, and if done well, it can increase the odds of greater success in the future. Set forth below are three tips to develop an effective continuous improvement strategy, from senior procurement leaders who participated at a Consero Group event that took place earlier this year.

1.   Determine the tolerance for change. Every large business is unique, so it is important to assess your own entity’s atmosphere before attempting to implement any broad shifts in thinking. This is especially important in the arena of continuous improvement, in which buy-in from those whose daily lives will be impacted is vital to success. Keep in mind factors such as existing culture, long-term pressures, and the company’s core mission when determining how much change the team can tolerate and when. Few corporate executives would oppose the pursuit of greater efficiency or value generally from the procurement team, whose impact is among the most powerful at virtually any company. However, taking the time to assess the landscape before shaking things up will allow you to tailor your efforts in a way that maximizes broad adoption of any new improvement strategies and
minimizes objections

2. Look for ideas at every level. At any large business, new best practices and useful lessons are learned each day. One intuitive continuous improvement strategy it simply to capture as much of thisinformation as possible by maintaining open lines of communication with executives from other departments outside of procurement. That said, many of the best ideas for critical organizational improvement come not from the top but from the employees working day-to-day on the front lines. These are the members of the organization’s team who interact most with customers and partners and who may well have the best sense of what does and does not work for the operation. Such individuals should not be excluded from the brainstorming process but rather encouraged to keep an eye out for improvement opportunities as part of their work. Moreover, they should be encouraged to communicate their ideas regularly. One method to facilitate such communication is the use of “If I Were The Boss” meetings, in which employees are encouraged to put themselves in the shoes of the CPO or other procurement leadership and discuss how they might run things if they were in charge.

3.   Encourage value-added work. A more substantive step for procurement leaders to enable continuous improvement is the pursuit of focused efforts to reduce the amount of transactional work for which employees are responsible—for example, by automating functions or developing templates where possible. By focusing on such initiatives, procurement executives will free more time for their reports to tackle value-added work like in-depth vendor research or partnership-building and increase the likelihood that they will identify and communicate opportunities for the department to operate more effectively. Most people envision the majority of work within procurement departments as transactional; however, such operations typically have untapped bandwidth and expertise that can yield strategic benefits for the business. By shifting their teams more toward higher-level work that cannot yet be automated—e.g., work requiring special expertise or skilled judgment, procurement leaders have an opportunity to accelerate continuous improvement plans, as well as boost overall organizational performance.

In an extremely competitive business environment, continuous improvement is a necessary element of organizational success, if not survival. By considering the suggestions above, senior procurement leaders can build a focus on continuous improvement into their organizational processes and keep the wind behind their organizational sails.

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