An agile procurement operating model

How do you restructure the procurement organization to enable flexibility and a strong connection to other parts of the business?

Enabling the future of procurement

Every organization and function knows that the future requires different and flexible operating models to keep pace with the changing landscape. Technology disruptors will naturally drive the automation of low value tasks moving the workforce to higher value activities, such as category innovation. However, even these higher value activities will require a high degree of cross skilling to allow the workforce to flex based on current priorities. In other words, having category managers managing one category in an endless loop will become rare. Rather, implementing flexible models will include the ramp up and ramp down of specialist resources, who take advantage of external insights, will help to execute more with less.

For procurement, the effectiveness and measurement of operating model value will no longer be linked to only “how much have you saved?”  Feedback from suppliers, customers and other stakeholders will address how they “feel” about procurement and the services provided.  An agile operating model will tie it all together and includes areas like:

  • Structure - procurement’s role, size, shape, automation, and delivery model; the procurement organization structure will be lean, right-sized, and focused on higher-value services
  • Decisions - methods, decision-making, and governance; strong continued importance on simplifying the governance and decision authority frameworks with cross-functional alignment
  • Culture - behaviors within the organization; more proactive focus on defining the right culture needed to support the procurement strategy and sustain long-term value
  • Capacity for change - ability to undertake and manage changes; continuous improvement, Kaizen, innovation, and future proofing to be agile and continuously improve
  • Performance management - process and measurement of organizational performance; procurement effectiveness at the enterprise level will be a key indicator for success along with clear line of sight into what drives value for the organization
  • Leadership - strategic, direction, support, and communication; cross-functional and cross-business unit leadership involvement will be more prominent; procurement leadership sets the stage, and drives accountability.
An agile operating model ties it all together – adapting the role of procurement and foundational structure to support the agenda for the future.
Sougata Banerjee, Director, Procurement and Operations Advisory, KPMG US

The CPO agenda for the future of procurement

It’s no longer business as usual for procurement. The scale and speed of transformation required to address the mix of disruptors impacting procurement is unprecedented. The key to success is to proactively develop a blueprint for how your procurement organization can turn these disruptors into opportunity for competitive advantage and growth. Learn more about the future of procurement.