Procurement Needs Less Strategy and More Tactics: Lessons I Learned in the U.S. Navy
I served in the U.S. Navy after college. That experience influences my thinking as a Procurement and Supply Chain professional today.
Nowadays, when I talk with procurement executives, there is one common pain point – the inability to get up-to-date supplier data and have it fluidly communicated to different parts of the organization. Many also experience the frustration of creating supplier scorecards manually in Excel, having quality issues at one site without other locations knowing about them, and the subjective nature of the supplier assessment process. However, despite these difficulties, my observation is that procurement organizations are moving very slowly to adopt collaboration technologies which could help eliminate these pains. This is happening even long after other functions within their organization such as sales, marketing and customer support, have adopted technologies to mitigate similar pains and have realized the associated savings and benefits. Why is this?
Having worked in the industry for more than 15 years and given this much thought, I have come to the conclusion that a major factor is a bias against “tactics” in favor of “strategy”.
Google has a nifty feature that shows the relative usage of a word in public discourse over time since the year 1800. While the root of the word Strategy goes back to the ancient Greeks, the modern concept seems to have become popular only since World War II and reached a very high and sustained peak in the last decade. In our profession, this trend correlates well with the rise of category management based on category specific strategies.
Strategies are of course essential to modern supply management. Strategies help us hold our course during day to day turbulence. However, they sometimes provide cover for our inclination to see market conditions as continuing in the direction we have forecast instead of digesting and reacting to new information in a timely manner.
Reacting well to changes in our circumstances is the realm of Tactics. Tactics are the practices or skills we employ to accomplish specific procurement objectives. Reverse auctions, iterative negotiations and assessing supplier risk are tactics. Collaboration is a newer and very powerful one.
The Word "Tactics" vs "Strategy" in public discourse over time
This chart from Google shows that the word “Tactic” hasn’t enjoyed nearly as much growth in popularity in recent decades as the word "strategy". In fact, usage of the word has waned since about 1970.
Drawing on Experiences from the U.S. Navy
Observing what is happening and reacting quickly may mean life or death in combat. I began my career aboard the U.S.S. Arkansas, a naval warship where we studied and trained relentlessly on tactics. The most senior watch position reporting to our Captain was called the Tactical Action Officer. At that time in my life, if you had called me “tactical” I would have proudly said, “Thank you!”. Strategy was something that happened on the Admiral’s flagship or back at the Pentagon.
My point is not that we overemphasize strategy in modern supply management, but rather that we underemphasize embracing and mastering new tactics and technologies, and as a result we needlessly struggle at times.
Real Time Data is Essential for Reacting Quickly
This may be because without real-time data, tactics are hard to do. Back in the Navy, we had all sorts of sensors feeding us data in real-time on the movements of friendly and opposing forces. Unfortunately, supply managers are often the last to know about a late delivery or quality problem related to our suppliers, causing us to sometimes get stuck in reactive mode for days.
Central procurement is not viewed as helpful by supported business units and sites when it cannot respond positively and promptly to issues in real-time. “They’re (central procurement) focused on strategy. We’re (sites) tactical. They don't understand our needs.” is a refrain I’ve heard from site-based personnel.
The Opportunity for Procurement Executives
Here’s the opportunity. Collaboration as a tactic. Adopt new technologies that fit your organizational structure and culture. Teach your executive team to react quickly to real-time data that flows in daily and get the competitive advantage your organization needs.
New collaboration technologies give procurement a tactical advantage we haven’t seen in supplier management in the past, and this “new” kind of collaboration doesn’t require more meetings or email communication. Reacting in a way that saves you time takes no extra effort by the information recipient. Collaboration on our supplier management platform called LUPR provides buyers with real-time visibility of supplier issues arising in other sites or business units.
LUPR operates in a manner similar to Waze, the navigation app. Waze users get routed effortlessly around traffic jams and are alerted to hazards when other users passively or actively feed data to the app. This kind of collaboration technology allows more effective real-time, transaction-level data optimization, which enables dynamic procurement decision-making.
I recently asked a room full of procurement team members at a large Oil & Gas company how many of them use Waze. Every hand in the room went up. However, when asked how many collaborate with their suppliers only a few raised their hands. Let’s expect that we can apply these technologies in our workplaces to excel at managing our suppliers in real-time.
Sean Harley is the Co-Founder and CEO of LUPR - A Salesforce-based supplier management collaboration platform for buyers, stakeholders and suppliers. www.lupr.com