Selling Procurement Transformation

This week’s guest blogger is Greg Schuth, a Senior Advisor with Greybeard Advisors LLC. Greg is a Global Supply Chain and Operations Professional with 25+ years hands-on senior level management experience combined with 9+ years of consulting expertise in the areas of Strategic Sourcing, Supply Chain Strategy, Manufacturing Operations Optimization, Strategic Corporate Planning, Turnaround Initiatives, and International Project Management.

I was recently invited to share my procurement transformation coaching experiences with members from a mid-western ISM chapter. Before my discussion session, I asked the chapter members how many were proactively working on cost reduction programs. Most of the chapter members raised their hands. When I asked how many were regularly using a strategic sourcing process and total cost of ownership (TCO) focused methodologies, it was surprising to see only four out of the forty-five members raise their hands.

During the course of my discussion, I presented examples of the detailed Strategic Sourcing steps and Total Cost of Ownership (TCO) methodologies that Greybeard Advisors utilizes, along with representative samples of the sustainable savings achieved during our procurement transformation engagements. When I reached the end, I revisited the question of strategic sourcing and TCO asking who was using a rigorous strategic sourcing process and had achieved organizational buy-in. None of the members raised their hands.

In my roles as an advisor / coach, I have had the pleasure of working with dozens of companies on development and implementation of a procurement transformation strategy that will result in achieving sustainable savings within the company’s corporate culture. One of the most significant challenges during a procurement transformation engagement is obtaining organizational cross-functional and corporate-wide alignment to utilize a rigorous and collaborative strategic sourcing process. Many procurement professionals are using parts of processes or utilizing e-sourcing tools, but that is only part of the solution. There needs to be a fundamental shift in the organization culture to achieve sustainable savings.

I’ve found that a primary barrier to that adoption is that many procurement organizations do not have the organizational “equity” or “internal sales” skillset needed to achieve corporate-wide organizational buy-in and adoption. Successful corporations recognize that they can create a significant competitive advantage for their company by first investing the necessary organizational internal “sales” time, including the development of a business case. That involves engaging both internal and external resources to transform procurement by implementing a collaborative strategic sourcing culture that is adopted corporate-wide as a core business process.

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