Procurement: Creating complexity or driving efficiency – The search for value

Paul Royds

Director, Advisory

+61 402 318 441

In today’s marketplace, there is a circus of players selling procurement as a panacea for business optimisation, risk management, supplier management, sustainability and value creation. From value hawkers to system spruikers, event pedlars to LinkedIn toilers, everyone is selling a novel framework, model, system, platform, principle, infographic, process, contract or bot.

Businesses are spoilt for choice, and in many ways, much like your Friday Netflix movie, it has never been harder to wade through the assortment of offerings to find what you really need. Despite its best intentions, has procurement inadvertently created a complex paradigm, a landscape so loud that understanding the notion of ‘value’ has in itself become problematic?

The answer will vary depending on where you stand (public/private, commercial/non-commercial, exec/non-exec, buyer/non-buyer, supplier/client, professional/non-professional). For many businesses and governments, value-based procurement has been overridden by red tape legislation, complex technology overlays, prescriptive tendering processes, misaligned contracts and zero-value stakeholder pocket grabbers. As a result, efficiency, commerciality, outcome and partnering have been demoted in many settings by competing priorities and the fear of ‘doing the wrong thing’. For many organisations, these layers and hurdles have created frustrating procurement experiences, where the simple art of ‘buying’ something has become a malady of frustration, lost time and opportunity.

To soothe these inefficiencies, many organisations have reinvented their procurement teams into agile relationship managers, where value is understood, business needs are anticipated and procuring is simple. The problem is that these organisations are as hard to find as hens’ teeth. So the question has to be asked, if you’re not one of these organisations, what can you do to evolve into one? Areas of focus should include:

  1. Defining what value means to your organisation: understand value in terms of the benefit it brings to your organisation, including how it’s defined, captured and communicated.
  2. Challenging legacy: unlock new ways of working and thinking by questioning the ‘why’ of existing processes.
  3. Anticipating business needs: Leverage data but stay ahead of it. This includes anticipating buyer needs, leveraging early engagement opportunities and linking them to current market conditions
  4. Rationalising activities: focus on core value-add business activities and ignore the rest – outcome over effort.
  5. Whole-of-life value focus: embed longer-term value constructs across the organisation with a focus on sustainability and holistic decisioning methodologies

As we emerge into the new post-covid world, now is the time to relook at value in your organisation and ask ‘are we driving efficiency or creating complexity’? This is not about doing away with processes, procedures and technologies but finding simpler ways to secure tangible outcomes where effort is linked to value creation.

About the author

Paul Royds is a multi-disciplined procurement professional with over 16 years’ expertise in procurement, business consulting and project management. He has implemented numerous procurement models/transactions which have delivered cost savings and reduced risk with a focus on whole-of-life value generation.


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