How to Avoid Crashing Your Procurement Gears

We’ve all had this experience when first learning to drive a car with a manual gearbox (and sometimes when we are experienced!) – a crashing of gears as we struggle to go up or down a gear.

But with an automatic gearbox the transition is smooth and effortless and we are quickly cruising at our desired speed.

“What has this got to do with procurement?” I can hear you say.

Well, for me the answer is that the way we run our procurement departments or our key supplier relationships can be the same. Without the equivalent of an automatic gearbox we can find ourselves crashing gears and not making the progress we want … but at the same time generating a lot of embarrassing noise!

Let me explain.

There are four fundamentals that impact how we work with others and deliver the outcomes we have been set. These are:-
1. Our strategy
2. How we translate that strategy into operational tasks
3. The skills, capabilities and experiences of the people we work with
4. The culture of our organisation or our team.

If you think about these in terms of their scale and whether they are driven by conscious analysis and thinking or by emotion, you get the segmentation shown in the diagram below.
4 fundamentals

So where does the crashing of gears analogy come in?

Here’s the answer. Each of these four fundamentals can be thought of as the gears in our car. As we “change down” from strategy to operations we need this to be seamless or there will be a crashing noise.

In other words, we need to be able to convert our strategy into effective policies, plans and ways of working that people can quickly grasp and put into practice. But too often we find that this doesn’t happen. Strategies are superimposed on existing policies etc. without much, if any, thought as to what needs to change. The practical problem this creates is the equivalent of our gears crashing.

Equally, there needs to be a feedback mechanism whereby the results of operational activity are fed back into the strategy process so that the next iteration of the strategy builds in the (often changing) realities of the real world.

This can be thought of as double-loop learning as shown in the next diagram.

strategy-operations loop

In fact, there are six possible double-loops in this set up. They are:-

1. Strategy-Operations
2. Strategy-Culture
3. Culture-People
4. People-Operations
5. Strategy-People
6. Culture-Operations

So how can you make sure that each of these loops work without the crashing of gears that will slow down the effectiveness of our procurement group or our supplier relationship management programme?

For the strategy-operations loop to be effective you need to make sure that these questions are properly answered:-

• Does the strategy clearly state where we are going and why we are going there?
• Does the strategy identify the steps that are needed to achieve the strategy?
• Does the strategy identify how you will know when you have reached the destination?
• Is the strategy defined in terms that aid execution?
• Is the strategy defined in terms that are measurable?
• Is each element of the strategy allocated?
• Are there operational plans that deliver the elements of the strategy?
• Are there processes in place to deliver, manage and communicate the strategy and plans?
• Is there a review process in place?

Do this and you will have a truly effective means of making sure that you strategy is delivered and also stays flexible to adapt to operational changes. You will have the equivalent of an automatic gearbox!

In the next of this series of articles I will take a look at the other double-loops and how you can make them seamless as well.

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