Strategic Procurement Teams
Strategic & Tactical
- By Charles Dominick
- September 1st, 2013
PHOTO © LEONE_V/SHUTTERSTOCK
There are a significant number of different ways to organize the procurement department of a higher education institution. Some higher education institutions organize their procurement teams by category of goods or services purchased (e.g., there is a group of buyers for scientific equipment and supplies, a group of buyers for computer equipment and supplies, etc.). Others organize their procurement teams by internal customer department (e.g., there is a group of buyers assigned to the health sciences schools, a group of buyers assigned to the arts schools, etc.). Still, others organize their procurement teams by supplier.
One of the classic ways to organize a procurement department in industry is to separate it into a tactical team and a strategic team. This structure isn’t appropriate for everyone, but there is a telltale sign that doing so would be right for your institution.
Think about all of the long-term improvements you want to accomplish. Implementing the latest procurement technology. Transforming your team into high performers through excellent training. Building strategic relationships with other departments. Improving the key performance indicators you use. And all of those other projects that you wish you had the time to do.
Why aren’t you doing them? How much further ahead with these initiatives are you compared to a year ago?
What’s that? You’ve made little progress?
You may have cited “competing priorities” as the reason for falling behind on strategic improvement projects. Your competing priorities included that rejected shipment from a faraway supplier that forced you and your top team members to travel to the supplier’s facility for the better part of a week. Of course, then there is that supplier with whom you must have constant conference calls because they just can’t deliver on time, threatening your internal customer’s ability to keep a project on schedule. And who can forget when that one supplier went out of business without warning, leaving your team scrambling to find another source?
Those things were important, you say. They demanded attention.
I can’t argue with that. However, it should be clear that if these things have prevented your procurement department from making progress on those long-term improvements, you are allowing the strategic to become victim to the tactical.
I hear you: “Tactical? What do you mean ‘tactical?’ Solving these problems prevented some catastrophic consequences from happening to this institution! Those are strategic issues!”
Therein lies the common mistake. And also the telltale sign that separating your procurement department into a strategic group and a tactical group may be the right approach for your organization.
Many procurement professionals associate the word “strategic” with the word “important” and the word “tactical” with the word “unimportant.” Those associations should not be made.
All of the examples I described — the rejected shipment, the late supplier deliveries and the out-of-business supplier — are examples of tactical procurement issues. Important tactical procurement issues, but tactical procurement issues nonetheless.
If the people who are responsible for implementing the new technology, the training, the relationships and the new KPIs are also responsible for putting out tactical fires, do you think that those strategic projects will ever get implemented? Not likely. Or at least not quickly.
Therefore, you need to protect your strategic procurement talent from tactical responsibilities. Many leading companies do this by organizing their procurement department into two teams: tactical and strategic. Those that do get strategic improvements implemented within the lifetime of the leader.
If you choose to organize in this fashion, don’t think in terms of strategic being important and tactical being unimportant. Think in terms of strategic being long-term and tactical being short-term. And don’t commit the common organizational error of having your top talent devoted to strategic procurement and your various other staff members devoted to tactical procurement.
Because you know what happens to those that organize like that, don’t you? When an important tactical issue comes up, they need to pull their top talent off of strategic projects to solve a tactical problem!
And does the strategic stuff ever get done? No!
If you’re worried about putting one of your stars on a tactical team and that star becoming dissatisfied and ultimately leaving the institution, require a rotation where your top performers rotate onto the tactical team for six months before going (back) onto the strategic team.
This way, your top talent is kept interested. You have resources capable of handling the big tactical challenges that invariably arise. And you can actually bring some of those strategic projects to a successful completion.
Let’s face it. There will always be some major tactical procurement emergency that arises. If you are deferring strategic projects to put out tactical fires, you probably won’t complete a procurement transformation in your lifetime (or at least within the period while your institution still has the patience to keep you on the payroll).
Separating your procurement department into tactical and strategic teams can help ensure that your organization remains focused on making long-term improvements. Dedicating some of your top talent to important tactical issues ensures that those issues are given due attention. And rotating your top talent between tactical and strategic assignments will keep them challenged and interested.
A procurement organization split into tactical and strategic teams isn’t for everyone. But if making that step-change to a world-class procurement department has been more challenging than you imagined, it may just be the right structure for your higher education institution.
This article originally appeared in the September 2013 issue of College Planning & Management.
Charles Dominick, SPSM, SPSM2, SPSM3, is the president and chief procurement officer of the Next Level Purchasing Association (www.NextLevelPuchasing.com), a leading provider of procurement training and certification. He is also the lead author of The Procurement Game Plan: Strategies & Techniques for Supply Management Professionals. Prior to founding the Next Level Purchasing Association, Charles managed procurement for three leading organizations, including the University of Pittsburgh.