What Does the Tactical Label Imply for Future Staffing?
It’s no secret that tactical procurement is a traditional target for process reengineering. Whether it’s decentralization, offshore outsourcing or automation, organizations are trending away from having dedicated in-house staff placing POs and expediting.
So it might be natural for anyone working in tactical procurement to feel a distinct lack of job security. But not every organization is myopically hurrying to reduce or eliminate the headcount associated with tactical procurement jobs.
While it is common for a Procurement department to address the highly visible “A” categories, it is rare to find a Procurement department that has addressed all areas of spend and achieved its cost savings potential. The resources available to handle strategic responsibility for the “A” categories are too busy to address the less-visible “B” and “C” categories. This usually means that many categories of spend are undermanaged or even unmanaged.
These undermanaged or unmanaged categories are ripe opportunities for improved procurement contribution. And freeing up tactical resources to seize these opportunities is a win not just for the organization that stands to improve its bottom line, but also for individuals seeking more enriching work.
UPMC serves as a good example of an organization that leveraged automation to deploy more resources on undermanaged categories. By implementing the UPMC eMarketplace, 46 percent of the 380,000 annual transactions previously handled manually by tactical procurement professionals are fully automated. This has allowed UPMC to redeploy 25 of those professionals on strategic sourcing projects that produced greater than $14 million in savings that would not have been attainable had those individuals not been dedicated to strategic work.
“Transaction automation was key to our ability to create a SCM organization structure that optimizes the value we deliver to UPMC and provides meaningful and challenging work for our people,” says James Szilagy, UPMC’s chief supply chain officer. “I want my sourcing teams focused on building internal relationships and working through our value analysis process to deliver the best products and services at the best total cost, not heads down processing purchase orders.”
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 the period while your company still has the patience to keep you on the payroll).
Separating your Procurement department’s tactical and strategic work and then expertly positioning your talent can help ensure that your organization remains focused on making long-term improvements. Dedicating some top talent to important tactical issues ensures that those issues get proper attention. And rotating top talent between tactical and strategic assignments will keep them challenged, interested and in-touch with business needs.
Like any restructuring, reorganizing work among dedicated tactical and strategic procurement professionals is not easy. But if making that step-change to a world-class Procurement department has been more challenging than you imagined, it may be necessary in order to remain focused on implementing long-term initiatives while managing day-to-day operational challenges and “competing priorities.”