Think about all the long-term improvements you want to accomplish in your Procurement department: implementing the latest procurement technology, transforming your team into high-performers through excellent training, building strategic relationships with other departments, improving key performance indicators, and all the other projects that you wish you had the time to do.
Are you accomplishing all of those things? If not, why not? Reasons may vary, but there is a common response among procurement leaders in similar situations. If you’re like them, you may have cited “competing priorities” as the reason for falling behind on strategic improvement projects.
For example, one organization’s competing priorities may have included a rejected shipment from a Chinese supplier that forced top procurement team members to go to China for two weeks. Another’s priorities might be having a critical supplier whose poor on-time delivery requires constant conference calls because such performance threatens the customer’s ability to keep its production line running. And yet another might be dealing with the fallout of a key supplier going out of business without warning, leaving them scrambling to find another source.
Sure, those things were important. They demanded attention. That can’t be argued. However, it should be clear that if these things have prevented those Procurement departments from making progress on their long-term improvements, they have allowed the strategic to become victim to the tactical.
One may say, “Tactical? What do you mean tactical? Solving these problems may have prevented those companies from going out of business! Those are strategic issues!”
But characterizing those issues as strategic is actually a mistake. A common mistake. And if you’ve characterized these types of issues as strategic – and worthy of interrupting work on your key goals – it might be a telltale sign that you should strongly consider separating your Procurement department’s strategic assignments from its tactical assignments.
What Strategic Procurement Is Not
Many procurement professionals associate the word “strategic” with the word “important” and the word “tactical” with the word “unimportant.” That is not an appropriate dichotomization of those two words.
All of the examples described earlier – the rejected Chinese 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.
Separating the Tactical from the Strategic
If the people responsible for implementing the new technology, the training, the relationships and the new KPI’s are also responsible for putting out tactical fires, will those strategic projects 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 in one of two ways. They either organize their Procurement department into two teams: tactical and strategic. Or they simply assign certain associates to tactical roles and other associates to strategic roles. Those that adopt either approach tend to get strategic improvements implemented within the lifetime of the leader.
If you choose to organize in either 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 bottom-feeders devoted to tactical procurement.
Because you know what happens to departments that organize like that, don’t you? When an important tactical issue comes up, they have to pull their top talent off of strategic projects to solve a tactical problem!
And then does the strategic stuff ever get done? Not usually!