7 Procurement Leadership Qualities for Keeping up with the Joneses of the Procurement World
Procurement regularly comes under review. Benchmarks and surveys gauge procurement best practice and set the standards. Our post sets the scene for procurement’s “Joneses” and provide you with seven A-to-G procurement leadership qualities to assist your procurement leaders to keep up with the Joneses.
The Joneses of the Procurement World
There are a number of reports available in the marketplace that provide useful information to determine best practice and even what “world-class” means.
Therefore, we can use these reports to not only determine who the Joneses are but also use them to determine how to keep up with them.
ROSMA classify procurement performance into three classes:
- Top-quartile performers: deliver more than 7 times their cost and investment base in procurement, delivering more than $1 million in financial benefits per procurement employee;
- Middle tier performers: generate 3 – 5 times their cost and investment base; and lastly
- Bottom-quartile performers: show slow marginal growth.
The Hackett Group’s quantifies the benchmark for “world class” as procurement organisations that:
- have 18% lower operating costs and
- use 28% fewer full-time equivalents (FTEs) than typical procurement organisations.
Who are the Joneses then?
You guessed it – the Jones are the top-quartile performers; those who deliver more than 7 time their cost and investment base, delivering lower operating costs and also work smarter with fewer resources.
We limited our review of procurement’s “Joneses” and their performance to the following reports:
- The Hackett Group – The CPO Agenda: 2016 Procurement Key Issues
- 2016 ROSMA – What Good Looks Like
- Hackett Group -The World-Class Performance Advantage: Five Imperatives for Creating Greater Procurement Agility
The CPO Agenda – 2016 Procurement Key Issues
You should trust the Joneses
The Hackett Group’s annual Key Issues Study identifies the key procurement issues in a particular year. From the 2016 report, Hackett took 4 key priorities for procurement leaders:
- the importance of procurement’s role as trusted advisor,
- improving agility and speed,
- increasing spend influence, and finally
- tapping into supplier innovation.
However, it also states the obvious:
“some procurement organizations have little ability to address them (i.e. the 4 key priorities), making them critical targets for capability development…. Finding the right balance between these sometimes conflicting goals is one of procurement’s greatest challenges…..To close capability gaps, procurement is looking for better ways to harness big data and successfully integrate the next generation of workers into their teams.”
2016 ROSMA – What Good Looks Like
Make it Count, Mrs Jones!
The 2016 ROSMA report highlights 7 attributes of good procurement:
- Business recognises strong procurement teams as integral business partners;
- Procurement leaders are accountable for results, stakeholder happiness and team productivity;
- Procurement teams set well defined and respected performance metrics that business understands and supports; “what counts get measured, what gets measured gets done“.
- Regular and thorough evaluation of procurement performance;
- Key stakeholders understand procurement value drivers and they know the desired performance ranges;
- Major stakeholders understand how procurement creates hard value and consider procurement to be effective; and finally
- Top quartile procurement performers easily achieves a ROSMA score of 7 or more.
Hackett Group – The World Class Performance Advantage
As easy as 1, 2, 3 and 4 and 5 except it will take 2, oops 5 years….
The Hackett Group’s 2016 procurement benchmarking quantifies the performance advantage of world-class Joneses compared with typical procurement neighbours.
The report reveals five of the strategies currently defined as world-class procurement.
The 5 key strategies include:
- reallocating procurement resources from a transactional focus to value add;
- embracing digital transformation;
- leverage analytics-based decision making;
- adapting a stakeholder/customer-centric service design and delivery; and
- reselling the procurement function.
However, keeping up with the Joneses takes a bit of doing as the Hackett report explains:
“Achieving world-class performance takes five years or more. However, a company is likely to see marked improvements within two. These early wins are pivotal, establishing a foundation for more sweeping successes down the line.”
Investing in procurement leadership and procurement leadership qualities
A necessity – not a wish list
The purpose of this post certainly does not focus on technology and the importance of having access to the right data, systems and technology.
Technology has a critical place to fill in business.
However the best technology and data get you nowhere unless you have the right procurement leadership in place.
Investing in procurement leadership and improving leadership qualities is a necessity not a luxury.
Business does not have 5 years or even 2 to wait for procurement leaders to move up on the ladder.
Gone are the days where procurement can send out yet another one-sided demand for cost savings.
Even further gone are the days where there was room to move within your team – procurement teams these days are leaner than ever. Procurement leaders are even more stressed out and under the pump.
To see improvement in procurement performance, business has to focus on developing the right procurement leadership qualities and invest in their procurement leaders and teams.
Also, remember – the Joneses do not stand still and wait for their neighbours.
The Joneses continue and will continue to raise the fence higher and higher. Thus, it will get harder and harder to get onto the other side of the fence.
In any case, the top performers perform even better than last year and will continue to do so this year and the next.
The A-to-G of Procurement Leadership Qualities
Our 7 Procurement Leadership Qualities for keeping up with the Joneses come from our background, experience and achievements.
Ultimately, we know what it takes to perform and to be top performer and procurement leader.
We know what it takes to perform as a top-quartile performer and in addition, how to achieve more with less.
From time to time, we also have to be creative. Thus in our 7 procurement leadership qualities we used our imagination and created an A-to-G list of qualities.
As a result, our A-to-G of our procurement leadership qualities include the following leadership qualities from A to G:
- Attitude First
- Business Alignment
- Expanding Horisons
- Focus on the end goal; and finally
- Goalpost movers and shakers
#1. Attitude First
Although the reports highlight different key traits and focus areas, none of the reports seem to focus on attitude.
However, in our experience, attitude and not skill as such forms the foundation of performance or lack thereof.
Attitude is internal to a person and ultimately motivation comes from within.
Aptitude, on the other hand, can be learned.
Zig Ziglar describes attitude very well:
“Your attitude, not your aptitude, determines your altitude”.
With the right attitude, procurement leaders will lead, inspire, perform and also add value to business.
#2. Business Alignment
Procurement leaders align themselves with business drivers and outcomes.
In addition, they make sure that their teams become integrated business partners (as per the 2016 ROSMA report).
Business alignment also includes holding yourself accountable for your procurement performance and integrating as part of business with a specific role to play.
#3. Collaboration, Not Isolation
Collaboration refers to the ability to collaborate with internal and external stakeholders, to build bridges instead of putting up barriers. It refers to the ability to influence progress and innovation.
Procurement managers who do not collaborate or care to collaborate, will not raise the bar or improve their performance. Procurement cannot function in isolation.
As we see above, the Joneses certainly understand about adapting a stakeholder/customer-centric service design and delivery.
#4. Decision-Making: Facts not Fiction
The buck stops somewhere. And with sourcing and procurement, the buck stops with procurement leaders.
Therefore procurement leaders must have solid decision-making qualities.
Thus, procurement leaders must be able to separate fiction from fact and work with proper facts, data, analysis and justification. This also includes risk management.
As per Hackett’s world-class report above, this includes embracing digital transformation and leveraging analytics-based decision making.
#5. Expanding Horisons
Procurement leaders must be able to look beyond the traditional and source for innovation.
Therefore this means – getting out of old comfort zones, working with suppliers and entrepreneurs to find innovation. Tapping into supplier innovation as per the CPO agenda above.
#6. Focus on the end goal
In day-to-day procurement, it often becomes a struggle to find time for strategic planning and thinking because of the transactional overload; especially in organisations where little money is spent on technology and systems.
ROSMA 2016 sums up where the focus has to be really well:
“what counts get measured, what gets measured gets done“
#7. Goalpost movers and shakers
“Life is like riding a bicycle. To keep your balance you must keep moving.” – Albert Einstein.
We can say the same about procurement.
Instead of being disrupted, procurement leaders are the ones to raise the bar and move and shake the goal posts for continuous improvement and outperformance.
Procurement needs to be agile – because the Joneses certainly are.
The Joneses lead by example: Procurement Leadership Qualities Do Make a Difference
Although we may refer to top-quartile performers as the Joneses, we have a lot of respect for their achievements and for their procurement leadership qualities. We do believe that more should be done to reduce the number of stragglers and improve the performance of the pack in the middle.
Just imagine how incredible the return on investment would be if we helped more procurement managers to improve their procurement leadership qualities and become leaders?
In my opinion, there is a direct correlation between the lack of innovative culture in the broader organisation, the lack of technology and access to good data on the one hand and poor procurement performance on the other hand. This makes it incredibly hard to step out of the middle pack.
Another reality is that, as we see with the Hackett report above, it takes at least two years to make any real difference. Five year to move to the top. All things considered, five years is a long time to stay committed to the end goal and to keep moving towards the end goal.
If, on top of these shortcomings, we also add little or no training, no support or no mentoring for leaders AND thus do not invest in our procurement teams, we really cannot expect our procurement teams to perform. We can therefore not really expect our procurement teams to tap into innovation. Not if we continue failing to tap into the right procurement leadership qualities.
And finally, to top it off – the true procurement leaders with the right procurement leadership qualities will leave and the organisation will be worse off.
Therefore it is critical to invest in the people in procurement that do have the right procurement leadership qualities.
As I said before:
Just imagine how incredible the return on investment would be?
Please CONTACT US for more information on our procurement leadership packages and how to improve the procurement leadership qualities of your procurement leaders. We believe it is a necessity not a luxury.
Have a great day!
To learn more about Celia, please click here.