Shaping the Connections – Linking Procurement and Strategy

One of the challenges in business is to make sure that the actions of the various parts of the business align with business strategy. This seems like a really simple area of activity, but our observations over years of the challenges this poses deserve some reflection.

The first issue for many businesses is the quality of the business strategy. It is easy to find mission statements and corporate phrases which seem to have been taken from a business primer, and seem unrelated to the real or apparent mission or aims of a business. It’s also easy to find examples where the statements made have evident contradictions within them.

Let’s assume, for now, that we have access to a business strategy that is contradiction free and appears meaningful. Our next issue is whether or not there is alignment between that statement and the ability of the business to deliver that strategic intent.

An example is helpful here as an illustration. Take a business strategy statement which contains the sentiment ‘we will minimise our impact on the environment’ (see http://www.affinitysutton.com/about-us/our-social-purpose/environment-sustainability/ as an example *: ‘We believe part of being a business for social purpose is minimising our impact on the environment’.
This implies that there will be an evident link from this statement into working practices in the business. A procurement organisation will have to take this statement and see how ‘minimising’ can be translated into a set of activities, policies and procedures.

Equally, there needs to be a balance of this strategic statement against other strategic statements, such as optimising profit for re-investment, health and safety and any other priorities for the organisation.

So, how can a procurement organisation read this as a statement, and what should it expect? In the balance of any purchasing decision, there must be the ability to look at options for different purchase approaches, and how the balance between those approaches work. The building trade generates a notable amount of waste, so some purchasing decisions could be influenced by a waste minimisation approach, which may be less cost efficient, but achieves the ‘minimising statement’. Potentially, focussing in this area can identify additional approaches which will help minimise waste anyway. The challenge is to have the business case for the chosen approach expressed in such a way that the balance of the different needs and strategies can be seen and evaluated.

However, it may be that the environmental strategy has less weight than one of the other strategies; promoting it above other imperatives will cause a conflict unless there is a really good additional reason for doing so.

Here lies the core part of this challenge: making sure that we understand the business strategies sufficiently well that we can deliver progress in a balance of areas, in a way that our business leaders find compelling.

A range of techniques is available to do that; variations on balanced scorecards, weighted grading systems and others have all ben developed and used to good effect. We’ve used a range of them in the past to make sure that strategic alignment is well considered and used to drive business decisions.

However, none of this will work if the business strategies have been put in place without thought about how they can be operationalised. At this stage, we may have to go back to the business leaders and test and challenge the assumptions which sat behind the original statements. If nothing else, it will be the start of a valuable conversation.
* Note: I’m using this as an example; I have no knowledge of how this particular business actually operates; it came up first on a search for ‘business strategy of minimising impact on environment’. As a social enterprise and a NFP organisation, it has a strong link to some of the ethical issues suggested above.

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About Mark Hubbard

I set up a specialist purchasing consultancy and a business focussing on seeking innovation. I work all over the world with clients, helping purchasing teams develop new ways of delivering value for their businesses. I love thinking about how purchasing works, and how it can be better, and I'd love to share some of those thoughts with you
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