Strategy – The Ugly Duck of Procurement Transformation

Following the publications on digital future in business, many authors suggest that soon we should have more time for strategy development and implementation. Digitization (analog to digital information) inside and outside the company, should lead to digitalization (digitized information works for you), and finally enable digital transformation (possibility for creating new business concepts). We currently notice a lot of effort being invested into transforming operational and tactical activities into digital format in all areas: marketing, sales, development, production, supply management.

If we observe this change from the Procurement´s point of view, while digitization and digitalization are currently being conducted, it still remains on operational and tactical level. Harvesting the benefits of digital transformation will be possible only if strategic transformation follows their lead. Automatized source-to-pay and sourcing processes create only a limited value for the company.

Procurement objectives, activities and mindset are still tactical-operational, and, in most of the companies, revolve around cost reductions, sourcing, negotiations and supply chain risks. CPOs still mainly follow the old-fashioned agenda, and the true mobilization of internal clients remains the main hurdle. Almost 35 years after Peter Kraljic’s insight, procurement education fails to enable people to make the strategic transformation happen as well.

The procurement of the future requires acquiring new competences. Such competences mean true leadership, sales rather than purchasing skills, swinging between the big picture and details – in fact, understanding the business context on all levels. One of our most popular articles Everybody Loses if Procurement Is a Fire Department still seems to be up to the minute. See – Strategic procurement always starts with the identification of internal clients (procurement stakeholders), and their business requirements and expectations. In the new digital world procurement managers become entrepreneurs. Ready for the brave new world?

Drasko Jelavic is a strategic procurement expert and Cirtuo’s CEO & founder. With almost 20 years of experience in strategic transformations, his knowledge was continuously upgraded in a top consulting firm in a variety of business industries.