In Part I we noted that, five years ago, Source One Management Services ran a survey that they summarized in a 4-part series on how Companies Face Limited Procurement Resources that demonstrated the dark state of affairs in Procurement at the time. They found that 1 of 3 Procurement departments were understaffed, and this was not a good thing as costs were climbing, GDP growth was flattening, and availability of supply in certain key raw materials and rare earth metals was diminishing and it took a talented Supply Management team to navigate these chaotic waters. We also noted that, since then, the situation hasn’t improved. Today, 51% of Procurement Leaders believe they do not have the capability in their terms to deliver their procurement strategy. But despite this, 72% of Procurement Leaders are spending less than 2% of their budgets on training. And the need for professionals is six times their availability.

We also noted that, in order to cope with the situation, there were three things you had to advance in an understaffed, undertrained, and overworked organization.

• Analytics, and not just technologically,
• Category Sourcing, and
• Value Source identification.

But that might not be enough on its own. So what else can your Procurement department do?

At a high level, your department can either do something or it can do nothing. Assuming your department chooses to do something, it can do it internally, or it can do it externally. If it does it internally, it can add staff or augment staff. If it does it externally, it can augment staff or outsource. If it outsources, it can outsource projects or outsource categories / commodities to a GPO. In other words, the options are:

• Do nothing.
• Hire more staff.
• Augment headcount with temporary staff.
• Augment headcount with service/solution provider personnel.
• Outsource project(s).
• Outsource categories/commodities to a GPO.

Even though you might think your superiors want you to do nothing, as they give you nothing to work with, and won’t hire more staff, that’s not the answer. You’ll just get more budget and staff cuts. And even if you can eventually get approval for temporary staff augmentation, that might not be the answer in the short term. It takes time to ramp a new hire up to speed, and that which is given may be taketh away even quicker if you don’t get results within the unrealistic time frames set before you.

This says that, in the short term, your best option is typically to:

• Augment headcount with temporary staff.
• Augment headcount with service/solution provider personnel.
• Outsource project(s).
• Outsource categories/commodities to a GPO.

But the right answer is not always clear. For example, while you might be able to save an average of 10% off of your office suppliers by switching to a GPO, if you are including high cost / high volume items like printers, external storage tapes and drives, and office chairs in your office supplies, you might do better sourcing those separately. If this means that the remaining spend is not enough for the GPO, that might still be okay if you can save enough on the big spending items and just negotiate an x% off catalog pricing on the rest.

And when do you augment staff on your own versus flipping a project to a service provider’s staff? If it’s just muscle you need to get your spending in order and to run one-off analyses to find new options and to make sure spend is put through the system (to get maverick spend under control), then your best option might be to augment internally. But if you need someone to source medium- or high-dollar complex / strategic categories, you probably need some category expertise. Chances are that expertise will be hard to find, expensive, and only needed once every couple of years. Unless the candidate comes with some other useful skills, then you might want to temporarily augment your staff with expert service provider staff.

Tough questions, let’s see what we can make of them in Part III.