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Think about your own procurement operations for a moment. What is your current procurement operating model? Our latest research suggests that 70% of CPOs are still transitioning to a new procurement operating model. Here at WNS Denali, we believe you have an efficient operating model if your organization is actively segmenting the work of procurement into tactical and strategic roles.
In this structure, transactional work is optimized and automated.
The strategic procurement roles can then increase their reach and influence by looking at their procurement ecosystem holistically to fill gaps and make a big impact, such as investing more time and resources into a tail spend management program.
Another approach that offers strong strategic benefits and cost savings is a central execution team approach for your procurement operations. This procurement operating model relies on an on-demand, shared service team that partners with procurement and business stakeholders to unlock value. In this structure, procurement teams can organize around this operating model internally, or supplement their team with a third-party procurement consulting company. The latter approach frees up existing internal resources and talent to concentrate on medium to high-risk, complex procurement projects that require greater strategic alignment with the business and its goals. In addition, working with a procurement consulting partner helps relegate tactical execution of low-spend, low-risk, single-source purchasing decisions to individual business units. In this way, a central execution team is an “enabler” that helps support procurement’s larger mission and allows procurement the space to find innovative solutions for stakeholders.
In a central execution team approach, Tier 1 projects are managed by the internal procurement team (or supported by a procurement consulting company). Then, Tier 2 and Tier 3 are handled by the central services team with regular weekly checkpoints, quarterly scorecards and/or bi-annual reviews). Finally, Tier 4 are managed by individual business units with process support from the central services team.
Six Ways a Central Execution Team Approach Can Unlock More Value
To dive deeper, a central services team approach focuses on:
Optimizing the supply chain
Establishing best practices in procurement
Sharing expertise and knowledge throughout the organization to deliver value and cost-savings
With those core objectives in mind, below are six ways a central execution team can help deliver more value for your organization:
#1 Drive Impact: Identifying and defining return on investment goals for your central execution team helps with accountability. For example, in this type of procurement operating model, the execution team can measure their progress against key goals. Put incentives in place to continually look for opportunities that can drive more value for the organization.
#2 Deliver Global Scale: When implementing a central services approach, pull out your category management playbook. Start with a small, low-risk project in a mature category. This relatively controlled experiment helps establish procedures that work and demonstrates potential value to stakeholders as you ramp up locally, regionally, and, eventually, globally. A central services team with global scale keeps pace with business needs around the world, offering insights to deliver increased business value.
#3 Offer Flexibility: A central execution team powered by a third-party service provider, such as a procurement consulting company, becomes a one-stop shop for multiple services. The on-demand nature of this approach means your procurement team has access to the necessary skillset, capacity, and capabilities when they need it. As a result, this frees up your strategic resources’ time to concentrate on high-stakes projects, build stakeholder relationships, and develop strategic roadmaps aligned to business goals.
#4 Be Process Experts: Consistent and standard processes make it easier and more attractive for stakeholders to engage with procurement. A central services team built around strong processes offers a quality experience for customers that encourages repeat engagement and increased spend under management. Processes should be a superpower, not a roadblock for your stakeholder alignment efforts.
#5 Improve Total Business Alignment: As the brand awareness of your central services team increases, their integration with the business increases. These partnerships with IT, finance, legal, etc., result in a two-way stream of proactive communication and integration that adds value to the organization through improved Total Business Alignment – a big priority for CPOs in 2021.
#6 Exploit Technology Benefits: Technology in procurement is constantly evolving, which makes it impossible for most procurement team members to stay on top of the latest digital procurement trends and platforms. Thankfully, a central services team helps you drive efficiency through the use of technology. They are your go-to team for technology from strategic sourcing to procure-to-pay to robotic processing automation, and more.
Procurement Outsourcing is a big undertaking and moving to a central execution team approach takes time. If you have any questions on how to get started, feel free to message me on LinkedIn or follow along in our newsletter, The Lever, for more advice and recommendations on optimizing your procurement operations.
Before WNS, Cris was with GEP as Director, Business Development for consulting and managed services. Prior to that, she was in a sales role with two leading companies specializing in distribution and warehouse optimization - Fortna and Argon & Co (formerly known as Crimson & Co). Cris comes with more than 15 years of commercial experience, including driving sales for management consulting companies such as PwC and North Highland Consulting. Cris holds a bachelor’s degree from Cleveland State University and a Supply Chain Certificate from Georgia Institute of Technology. In her leisure time, Cris enjoys spending time with family and practicing for worldwide races and marathons.