10 key success factors for procurement transformations

Having spotted the strategic and ESG opportunities that procurement can unlock, a growing number of organisations are looking to develop the maturity of their procurement function. Dan Fielding, Managing Director at ArcBlue, shares 10 key success factors for leaders seeking to navigate the complex landscape of procurement transformation.

1) Clearly define the goals

Define the objective of the program, with measurable goals along the way – aligned with your organisation’s overall strategy. Whether it’s reducing costs, enhancing supplier relationships, or improving compliance, clarity in objectives sets the direction for the transformation journey.

Be specific (remember your S.M.A.R.T goals!) and verify your assumptions to ensure the commitment you are making is challenging but also progressive.

2) Develop a procurement roadmap

Once you know what you are aiming for, you’ll need to design the journey to get there – a simple time-based roadmap will allow the team to get on board and senior management to see progress. A useful roadmap should include analysis of your current processes, areas for improvement, and your plan with goals, objectives, resources and support required and timeframes.

Keep your roadmap visible and updated to encourage conversation, collaboration, and commitment.

3) Secure leadership commitment

This is such an important piece of any procurement transformation! Procurement transformation requires genuine support from the leadership. Try and identify champions from the leadership team to communicate its importance across the organization and allocate necessary resources to ensure its success.

Integral to leadership commitment will be ensuring the goals of the procurement transformation align with the company’s strategy and ambition – beyond procurement goals. You’ll need to be able to communicate your vision for the transformation clearly and make the leaders feel invested in the journey by allowing them some decision-making responsibilities.

Ensure you have an understanding of their concerns before you present your vision, and proactively address them, demonstrating you understand their challenges and motivations.

4) Foster stakeholder engagement

The transformation of procurement should be for the business, not just the procurement team. Involve key stakeholders from business units such as finance, operations, and IT early in the process. Their insights and buy-in are critical for identifying pain points, addressing challenges, and fostering collaboration throughout the transformation journey.

When sharing your vision for the future, remember to demonstrate the benefits and potential disruptions from their point of view, and make use of real-world examples to illustrate benefits.

5) Leverage data-driven insights

Harness the power of your spend data to gain deeper insights into procurement processes, supplier performance, and market trends – both ahead of your business case to leadership and throughout the transformation process. Leveraging data-driven decision-making will help you to identify opportunities for optimization and drive informed strategies.

Data analysis throughout the transformation process will help to keep you on track and give you a solid baseline to measure improvements against.

6) Use digital enablement to guide stakeholders

Technology is often at the heart of a procurement change program as it can enable the implementation of your new operating model and processes.

Procurement experts at Bain & Company [the parent of ArcBlue] advise that “programs that span business units, regions, products, or functions need a shared tool to track progress and performance and ensure teams are accountable and leaders engaged.”

So whether it’s e-sourcing platforms, contract management systems, or spend analytics tools, the right technology infrastructure is essential for driving efficiency and effectiveness.

Consider if a digital ecosystem approach may be a better fit than a new ERP for your organisation. This means looking at existing or smaller systems that can work together seamlessly to create a digital workspace, which may reduce time, risk and change fatigue over the course of your transformation.

7) Develop the capability of the team

Developing procurement teams with the skills and capabilities needed in the new operating model is critical. Too many transformations fail due to the team not being aligned or being trained to step up to meet the requirements of the new model.

Learning programs to accompany the transformation should be customised to your needs. Training programs, coaching programs and continuous learning initiatives to enhance their expertise in technical procurement competencies such as strategic sourcing, contract management, and supplier negotiation can help shift the dial.

In our work with clients at ArcBlue, we often see procurement leaders looking to build ‘behavioural skills’ to help guide the business through a transformation processes, such as building sales skills for procurement professionals, storytelling and innovation and continuous improvement skills.

8) Build a compelling business case

The great thing about investing in procurement is that there is generally a compelling business case to support it. Ensure you include a commercial view – change programs can take time, money and resources so you need to be able to clearly showcase the benefits. By identifying benefits of the change and calculating the ROI, you can increase the likelihood of genuine buy in. Make sure you include input from your stakeholders.

Remember, a successful business case combines persuasive storytelling and facts to compel stakeholders to take action. It’s also important to make your business case user-friendly, both in structure and design, so that each stakeholder can easily digest it.

9) Get suppliers on board

It’s hard for procurement to do much without its suppliers. Involving strategic suppliers in the program and operating with transparency and trust will allow ongoing value to be delivered.

By harnessing collaborative supplier relationships – including strategic supplier segmentation, meticulous performance assessments, and the integration of cutting-edge collaboration platforms – your suppliers can help you to achieve your transformation goals. Without supplier buy-in and assistance, transformation could be slow to progress.

10) Measure the results and communicate about success

It might sound strange but procurement needs to sell itself sometimes! Procurement delivers such value for the organisation but doesn’t always talk about it. Having clear KPIs to track the progress and impact of the procurement transformation program and then communicating progress across the organization will build confidence and momentum.

Encourage feedback from stakeholders, benchmark against industry best practices, and stay abreast of emerging trends to then sustain long-term success.

Communicating and celebrating milestones achieved during the transformation journey is a great way to keep change-weary stakeholders engaged in the process, and able to see the light at the end of the tunnel.