Procurement GPS

The Challenge

This case study concerns an organisation that processed natural materials into consumables for both industry and the general public. Over a long period of time it had developed a market reputation for quality, and shipped products throughout Europe.

A consultancy had become ensconced within the procurement organisation for a number of years and had succeeded in persuading the senior management team that all opportunities had been exploited and the next stage was a period of consolidation – led by them. The senior management team did not have enough knowledge or experience to be able to argue with this proposition and therefore accepted it on good faith.

Given ever increasing competition in the market, it was clear that a pipeline of opportunities needed to be maintained in order to protect the organisation’s position as a major player.

The Solution

Initially, the Procurement GPS was used to identify issues within the organisation where a supply solution could yield significant business benefits. These findings were then used to engage the senior management team and demonstrate the breadth of opportunity presented by a business-oriented procurement organisation.

Once sponsorship had been secured from the senior management team, a process survey was conducted to understand the current levels of capability of the function at that time and therefore what its potential was to deliver the opportunities identified above to a level that would result in a measurable competitive advantage. The capability gaps and opportunities were then aligned in order to create a strategic plan that would simultaneously address internal development needs and the external business improvement needs.

Implementation was organised around a project-based framework that emphasised improving processes as the means to delivering a sustainable step-change in performance. It was agreed that the results should be measured and validated by Finance to add credibility to the programme.

The Results

By selecting high profile and high impact issues, the recognition of procurement as a value-adding function was significantly raised within the organisation.

The long-term 'resident' consultancy decided to leave before they were pushed and this led to a new wave of enthusiasm and activity amongst the people within the function.

Double-digit savings were not uncommon amongst the many projects delivered, and procurement executives from other parts of the organisation began visiting to understand how they were delivering significantly higher levels of operational and business performance. 

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