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Becoming an Orchestrator of Value – A Deep Dive into Integrated Procurement Planning

As procurement maturity evolves and the complexity of management and performance expectations increases, the concept of “Planning” in a procurement context is becoming increasingly important. The following article provides an overview of the procurement planning context, problems that it solves, inputs, outputs, and a structured approach to developing this capability.

In today’s dynamic business environment organisations and their leaders are continuing to grapple with uncertainty and as a result are required to create more intentional alignment between “Value”, “Delivery” and “Projects”, and how we bring structure to the interrelation of these three aspects.

From a Procurement and Supply Chain standpoint, we are seeing now more than ever the importance of effective planning and risk management, but also the challenges that arise when it is not done well, or not done at all. Inherent in this is the need for Procurement functions to be clear on their purpose, and then translate this into their ‘focus', and ability to prioritise value. 

In addition, Procurement functions are dealing with an increasingly complex environment driven by several factors:

  1. Pressure on Procurement to better engage the business and demonstrate their value proposition
  2. Business expectations of the procurement function to offer a business partnering model, creating complexities integrating multiple functional strategies into a single plan
  3. Procurement’s ability to not only support, but increasingly become an enabler of the broader corporate strategy
  4. The growing range of diverse and sometimes contradictory KPIs and business requirements that procurement teams are expected to deliver value on
  5. Difficulty recruiting quality talent and a need for greater care in allocating these scarce resources (high value delivery orgs place a 2x emphasis on enabling internal workforce agility to deliver strategy1)

As a result of these challenges, a renewed emphasis on planning has arisen and the need to deploy a more structured planning capability across Procurement functions.

Today, Procurement functions typically operate in a reactive manner to incoming business requests with many of these teams prone to Parkinson’s Law2 - with work expanding to fill the time allotted for it’s completion.  As a result, procurement teams appear (and genuinely are) busy all the time. But how can we be sure that resources are allocated to the right procurement teams, that they are working efficiently and are focused on the projects and activities that will deliver the most impact? A methodology and tool is required to provide insight that looks beyond how busy a team is in order to drive and measure effectiveness.

At an operational level, the objective of Procurement Planning is to bring together procurement activities into a digitally enabled methodology in order to effectively scope, allocate, execute, and track activities and benefits to facilitate a step-change in productivity and value delivered to the business.

Specifically, the Procurement planning ecosystem consists of a series of data inputs (e.g. sourcing requests, contract repository, category strategies, SRM plans), a tool to facilitate the process, and intuitive dashboard outputs for use by business and procurement decision makers and planners.

The following are a list of questions that an effective Procurement Planning approach can support you in solving for:

  • “What is the work to be done?”

Holistic view of activities at individual and team level to enhance business partnering conversations

  • “How can we ensure that we are doing the right work?”

Utilising insights to effectively prioritise existing and upcoming activities with the business

  • “How can we efficiently execute the agreed priorities?”

Right Size” procurement teams, introduce flexibility and workforce agility using evidence-based allocation of resources, and identify required skills, capacity gaps and/or restructuring opportunities

  • “How do we track progress and measure value?”

Model current and future performance against a range of KPIs and effectively communicate the value proposition to the business

  • “How can we better manage the annual business budget planning cycle?”

Visibility of Procurement impact to business budget and planning cycles

Ultimately, planning and prioritising procurement work more effectively will drive workforce agility and ensure that procurement benefits agreed with the business are delivered or enhanced. Furthermore, through better planning and management of activity we consistently see a procurement productivity and value uplift of over 10%3, which in a team of 50 people can equate to an additional 5 FTE worth of effort.

Equally, the risk of not planning effectively is a procurement team that consistently doesn’t meet their benefit goals as they fail to prioritise effectively, and one that can be distracted by new activity. This impacts directly on team credibility and business support as well as team morale and retention.

The establishment of a procurement planning process should, more often than not, be staged, with a clear focus on how this process will support the prioritisation and execution of strategy (Procurement and Organisation). Careful consideration of existing processes, technology architecture and capability will allow effective prioritisation and rollout. The image below provides an indicative phased approach for consideration, with 3 potential waves of uplift.

As the maturity of planning increases so too does the breadth of insights. This leads to a range of additional benefits including bottleneck / root causes identification, process simplification, clarity of areas requiring systems investment and capability gaps.

Whilst a staged approach is critical to realise the benefits and effectively manage the change, choosing the right solution to enable the process is equally important. There are a range of technology solutions available that are flexible, easy to customise and can integrate with existing enterprise solutions. Some of these are widespread enough that they may already exist in your organisation’s current technology stack.

Now is the time for Procurement functions to utilise effective planning to be more collaborative, ensure decision making alignment to strategy, take advantage of those productivity gains and to drive and demonstrate value to their stakeholders and leadership. If you would like to understand more about how to incorporate an effective Procurement planning process into your organisation, please contact us.

1. Deloitte CPO Survey 2023

2. https://en.wikipedia.org/wiki/Parkinson%27s_law

3. Deloitte benchmark – includes ROI uplift and savings delivered e.g., a 1% uplift on $1bn spend delivers an extra $10m in benefit.

Authors : David Bloch

Director, Supply Chain & Procurement

dbloch@deloitte.com.au

+61 419 267 932

John O’Connor

Partner, Supply Chain & Procurement

jococonnor@deloitte.com.au

+61 438 457 178

Chris Riley

Principal, Supply Chain & Procurement

chrriley@deloitte.com.au

+61 436 005 564

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