A recent brief by Bain on Winning With Procurement in Asia, released last December, in which they summarize the results of interviews conducted with 60 business heads and CPOs throughout Asia-Pacific, stated that while many of these business heads and CPOs report their Procurement capabilities as fair, or even good, none report their Procurement capabilities as great. Why?
According to the article, procurement teams in Asia-Pacific often
(1) lack organizational support and prominence,
(2) tend to focus on short-term activities,
(3) rely on inadequate demand management processes, and
(4) struggle with underdeveloped supply bases and insufficient core procurement processes such as category management.
In addition, they lack
(5) systematic supplier management processes,
(6) reliable data systems and
(7) strong procurement talent. Moreover, even though some companies make a point of investing in procurement talent, they fail to take the critical move of defining a clear career path for procurement professionals.
In other words, it’s the classic Triple-T Problem — a lack of talent, technology, and transition management. If we go through the list, we see that (7) is the talent problem, (6) is the technology problem, and (1) though (5) are an example of a lack of transition management.
The lack of systematic supplier management processes in (5) is a result of not transitioning to modern supplier management processes driven off of modern supplier management systems.
As a result of the lack of systematic supplier management processes, which is a direct result of poor, or nonexistent, transition management, these organizations are (4) struggling with underdeveloped supply bases and insufficient core procurement processes.
As they haven’t transitioned to newer Supply Management processes, these organizations are still suffering from (3) inadequate demand management processes.
Furthermore, as a result of not transitioning to newer Supply Management processes, with a longer term outlook, they (2) tend to focus on short term activities.
And, finally, as they have not helped the organization as a whole transition to better supply-management inspired business processes, they still have to deal with (1) a lack organizational support and prominence.
At home or abroad, good Procurement and Supply Management starts with the 3 T’s — talent, technology and transition (management). Without meeting this necessary condition, an organization will never be great.