Over the weekend I was reflecting on some recent conversations I’ve had with procurement professionals. One topic that seems to keep popping up is shared services and centralised procurement.
Today I want to discuss and elaborate on some ideas in this space. I’m going to share my own learning’s from operating in this space. What went well? What did not go so well?
The Move to the Centre
The centralisation of procurement is a challenge in itself; teams are created in space which means there is a community, which is important in today’s ecosystem. It drives efficiency, but what about the effectiveness? In particular in the context of global organisations, being far away from the business functions risks that procurement loses the connection to its important stakeholders.
The Connected Buyer
This may seem like procurement 101, but even today, I meet buyers who have never been on site with the stakeholders they are supporting. As a subsequence, things they are buying don’t meet the business needs, and in the long-term turn out to be more costly.
Equally, buyers who are intrinsically linked to their stakeholder and who have aligned their engagement with the supplier to the organisation’s objectives deliver solutions, which help to achieve business goals. Central procurement functions work well when the procurement teams are true business and supplier partners. They are agile and connected. And they are moving away from price point discussions; their focus is on business solutions.
Centralised Procurement and Shared Services – A Match Made in Heaven?
It seems that hand in hand with the centralisation comes the move to shared services. I must admit I have a few battle scars and have learnt a great deal from my mistakes. Initially, I believed that nearly every business process could be managed through either shared services or outsourced solutions.
I learnt the hard way when processes which weren’t fit for purpose were executed by well oiled shared service teams. These teams did what they were asked to do; they executed on a process. The problems occurred when processes were broken or ill designed. People receiving the service, and people in the shared service center were frustrated and started to blame each other. Equally, I have seen process design, which only looked at one part of the equation and not at the end-to-end process. Spending time upfront and doing the right things right is hugely important. The biggest learning for me was that everyone knows the pitfalls and yet we still fall into them.
I’m going to continue to dive into this topic over the coming weeks, sharing my specific experiences, so be sure to tune back in for that. In the meantime though, I’d love to hear your thoughts and experiences with shared services and centralised procurement operations. So please reach out with any learnings!