“Strategic” is a classic business buzzword. The phrase, “be more strategic” is commonly used by managers of all stripes and sensibilities and has almost as many meanings. These can range from the anodyne – to “be better at your job” – to something altogether more precise.
The world’s procurement functions are no different but, when used properly, the word signifies a real difference between good and bad procurement practices. The best procurement process managers (those that are “strategic” in their approach) are far more effective than their “tactical” counterparts. In fact the difference is stark: strategic procurement employees generate nearly six times as many savings as those who are not as strategic.
Senior procurement managers often struggle to find strategic staff but the good news is that there are a set of capabilities that define a strategic employee and that can be used to develop employees who are not performing as well.
The Difference Between Strategic and Tactical
For example, tactical-oriented procurement employees simply look to cut costs via sourcing, whereas more strategic staff pursue a wide variety of opportunities (like supplier collaboration projects or innovation) to support the business.
Tactical staff view sourcing events in isolation, whereas strategic employees connect the dots between what the business is trying to achieve and how Procurement can help. And tacticians merely communicate the process they followed and the outcomes they achieved, while strategic staff demonstrate the value of different ideas to the business and help them decide on the best course.
“One of the biggest concerns for us is that our staff lack business vision,” one head of procurement told CEB Procurement. “Often people are more focused on the short-term objectives that are quite specific to procurement activity but not really related to business activity.”
Procurement employees that are looking to be more strategic should focus on two main attributes: their ability to identify opportunities for the business and their ability to gain business buy-in for solutions.
But Procurement doesn’t have as many strategic staff as it needs to make the change to its new role as a trusted partner that adds value. In fact, 72% of procurement employees work in roles that require them to be strategic, but 27% aren’t effective at those roles, according to CEB research.
For more on the research behind what makes a strategic employee, CEB Procurement members should review the recent research on the dedicated website.
CEB Procurement members that are the head of their function can register for the remaining senior executive forum, which will cover the latest findings from CEB research on procurement talent.
And for more on the misuse of language in business, see this post on finance transformation.