… not even if you get industry and size specific! But first, let’s backup.

Today I’m going to pick on Tom Mills because he’s well followed, a great practitioner, and gets a lot of stuff right (and I mean a lot of stuff right) … including key functions your “optimal” procurement team needs to support. We’re tackling this now because, in addition to prophetic prediction posts which are full of fantasy, the new year also brings the annual posts that tell you what the Procurement function is, what it’s primary tasks are, and what team you need to address it. And even the most well intentioned ones by the smartest consultants and practitioners don’t always get it right — at least to the extent they think they do.

There’s a couple of reasons for this, and they all relate to their Procurement world view which:

• boils down to their (limited) experience, which is usually with a few companies in a single industry or related industries
• typically consisted of sourcing primarily one or two of the six major types of Procurement (which are indirect, direct, services, tail, software, and strategic consulting / commissioning projects — all of which need to be approached differently and often need completely different solutions from different providers to tackle)
• and usually revolved around a small set of systems and software offerings

Now, I’m not saying I can give you a perfect team model for your company, because I can’t. (In fact, without a deep analysis and evaluation of your company, no one can!) Not even if I created a starting one by industry, size, and geography — because every company is different, and those differences will create minor variations in optimal structure — which sometimes comes down to the talent you can get your hands on.

For example, in most companies product management and product marketing is usually two different functions because it’s rare that one person can do both. But someone who could do both would shift the organizational structure because a person who can do both would bring unique value — being able to design product and communicate the unique value to the market not only ensures all communication is accurate but all design is influenced by market need and reiterated to the market in a meaningful manner.

Now let’s review Tom’s proposal. As per our opening, it’s quite good. In fact, the elements are really good. You need business and category leads. You need sourcing and supplier value. You need operations and governance and someone definitely has to do that. And you need data and digital.
(And if it’s so close, why are we picking on Tom? Because to pick on someone who’s model is bad would require us to write a long multi-part essay or book chapter, and that’s just too much to make a single point.)

So, you need all of the people that are named (or at least the skillsets), but are they leads? Maybe. Maybe not. And is the model appropriate. Somewhat, but not really — not for a lot a of organizations (not being run by Tom or those with his Procurement world view).

But let’s start with the business and category lead and sourcing and supplier value lead. Maybe these are separate, maybe they are not. It all comes down to your philosophy on how you run Procurement. Are you event-based or category-based? If you are truly category-based, sourcing is part of category management, it’s not a separate function or activity — and your category leads know how to source. They will use analysts to help them understand the current market conditions; break down the cost structures; create should and target costs; identify the most likely suppliers; etc. But they will choose the strategy and own the sourcing event. There will be no “sourcing leads”, just “analyst leads” and “supplier development” leads.

Now let’s tackle the “data and digital lead” category. You’ll have a senior analyst lead who runs the team, which will consist of one or more spend and performance analysts and risk and resilience analysts, but the most critical member will be the Procurement Master Data Manager who will work with IT to ensure the necessary data is captured, maintained, enriched, and applied appropriately. Especially since any AI tool you use will blow up in your face without good data. (And if you’re using an LLM there’s no guarantee that it won’t blow up even with good data, but it’s much less likely to blow up with good data than with bad data.)

As for “digital and enablement specialist”, let’s start by clearly stating that any professional that isn’t digital 31 years after Nicholas Negroponte published Being Digital isn’t going to survive much longer in a world where everyone is chasing the AI Dream and trying to automate everything, even that which can’t be automated. Especially since those departments that lie and say it’s AI and adopt tech that works will be three, five, and even ten times more efficient than those that don’t. Every member will be responsible for digital enablement, not just a lead. The team may use expert consultants to help them pick the right tech and evaluate AI (to identify the hybrid or, better yet, old-school AI that actually works), but it shouldn’t be a separate lead in a modern organization.

Working back through the structure, let’s review the ops. An ops manager is critical — and a lot of departments miss this trying to be lean and mean. Someone has to ensure that all of the operations are aligned to support all of the category manager’s requirements from analysis through sourcing support though supplier development through compliance and risk management. And you probably will need a policy and compliance specialist, but should buying channel leads be separate from category management? And if so, is it a channel manager or a technology manager you need? You’re either buying off of contract, usually through an auto-reorder or catalog; from a marketplace; or through a sourcing event. Are those channels? (We’re not talking sales.) But you probably need an internal catalog manager and a marketplace expert.

Finally, the commercial advisory specialist and the contract and commercial manager should probably be on the same team in many organizations (i.e. the commercial advisory team).

In other words, the presented team structure is a great start for identifying key roles, but might not be the perfect org structure for you … or it might be. As noted above, it depends on whether or not you are category driven or not, tech centric or tech supported, and how much support the different roles need.

But most importantly, it depends on what industry you are in and what you are primarily purchasing. If you are in manufacturing, and are primarily purchasing direct, you will need a category manager for each major category as well as a liaison in the appropriate R&D and Manufacturing production teams for each major category. And since, in some categories, the supply will be limited it will be more about negotiation and target costs than open strategic sourcing, you will need engineering experts for target costs; risk experts to identify potential regional, natural, and economic risks related to a supplier; negotiation experts who understand BATNA who can balance supply assurance, quality, and cost; etc.

But if you are a retailer and just need finished goods, you barely even need a category manager. And you certainly don’t need to have a category expert embedded in another department. You just need to source, source, source. And there’s not a lot of risk analysis that needs to be done. It’s finished goods. If one supplier doesn’t supply, you go to another. Unless the retailer is a luxury retailer, it doesn’t care too much what the brands are as long as it can supply products that will satisfy its customers’ needs. And it will be the one organization that latches onto the digital and AI specialist as it will need tech constantly scouring for new suppliers, distributors, and marketplaces that can enhance supply certainty, quality, and/or cost effectiveness — because achievine any two of its three desires ain’t bad!

In other words, the optimal team depends on what the organization actually needs to succeed based on its industry, size, and maturity. It can start with a great template, but it will need to customize based upon its specific circumstances, processes, and maturity. And it might need help to define what that is.