Olympic performance versus Procurement Performance
22 September 2021
Olympic performance versus Procurement Performance
Richard Nixon is Head of UK and Nordics for Per Angusta, with over 30 years experience in Procurement and Consultancy and a true advocate of Procurement transformation
Like so many people, I loved watching the Tokyo Olympics and Paralympics. Whether competitors won or lost, what really mattered to each and every one of them was this: did I give my best possible performance on the day?
This got me thinking about Procurement performance and what we might learn from the Olympics and Paralympics. I have come up with a list of 4 lessons to be learned.
1# – You need to put in the hard work
So many athletes, having won a medal, say “I worked SO hard for this”. Rather than focus on their performance on the day itself, what matters to them is all the hours, days, weeks and years of relentless preparation that led to the main event; all that time when no-one was watching. Time spent finessing technique and details to make marginal gains.
Similarly, for Procurement Performance Management it is vital to think about and work hard on:
- Agreeing your definition of savings with all the relevant stakeholders
- Having an efficient and effective approach to target setting that is aligned with the wider organisation’s budget setting approach
- Setting up the most efficient and effective governance: will this be done through a regular cycle of meetings or via an exchange of information? Who will be authorised to approve savings, both within and beyond Procurement?
- Establishing clear guidelines regarding who signs off what, in Procurement, Finance and beyond
- Maintaining your performance records every day
The best Procurement performance is built on a platform of hard work, structured thinking and diligent development.
Finally, accept that just as training is the lifeblood of athletic performance, savings are the lifeblood of procurement, and therefore you have to keep working hard to keep the pipeline in good condition.
There is much debate at the moment about Procurement moving beyond savings, to show its value in terms of tracking sustainability, reducing supply chain risk and driving innovation. I see these developments as positive, but Procurement professionals must never ignore the need to drive commercial value for their organisation.
2# – Make the investment
In 1996 Team GB infamously won 1 gold, 14 silver and bronze, and came 36th in the medals table. Due to the lack of funding, many athletes were training in addition to holding down a job, and their training facilities were basic. Thanks to a radical (and ruthless) rethink of sporting investment driven by The National Lottery, Team GB has finished 4th, 3rd, 2nd and 4th in the last four summer Olympics.
Recently I have seen a wide range of investment levels in procurement performance management, which fall roughly into three categories. At worst, organisations cobble together Excel spreadsheets and then communicate them via a spaghetti of emails. Information bounces back and forth before an agreed version of the truth can be reached. The problems with this are:
- The data are up to date if and only if the updates have been completed
- There is little or no shared visibility
- It is impossible to keep an audit trail of what has or has not been happening on pipeline projects
- There is no integration with other Procurement technologies
In the middle are teams who are arguably a step up. Maybe they are using Sharepoint, which enables access to the same data for a wider population. Perhaps they are using the available functionality from their Source To Pay system, which may cover RFQ driven saving projects, but does not cover other savings opportunities. Depending on the situation, the latter can account for 30-70% of the total value of pipeline opportunities. These are typically covered by good old Excel.
By contrast, the best Procurement Teams:
- Manage, approve and review performance based on real time data, visible to Procurement, Finance and all other relevant stakeholders.
- Whether they are using end to end solutions or best of breed technologies, the integrations are in place to make the data connections and project approvals in real-time.
- Link with technologies providing the latest data on other aspects of supply chain performance, such as financial stability, sustainability, cyber risk and others in order to decide where to focus for their next improvement projects.
This is what we at Per Angusta provide and enable. After all, if you were an athlete, you would not want to wait for your performance stats, you wouldn’t want them in separate places and you would most certainly want up to date information on what is happening in the world around you (focused on your competitors rather than your suppliers).
3# – Use all the data and act on it
In 1992 Linford Christie won the men’s 100m gold with a time of 9.96 seconds. This year, Lamont Jacobs ran it in 9.8. That’s just over 1.6% improvement in 30 years and yes, I am overlooking Usain Bolt’s 9.63 seconds, a mere 3.3% better than Christie. As Matthew Syed has pointed out, humans have not evolved in this time. Athletes have simply looked at the data, practised and achieved the resulting improvement.
Too often in Procurement (and other functions), once the year is done, we dump or forget the data, missing a massive opportunity to learn for the next event. In the current environment where many categories are experiencing price inflation for the first time in years I wonder how many Procurement teams are or are even able to go back to the performance data from the last time they experienced such pressures, in order to inform their pipeline prioritisation for the coming year.
4# – Break down the analysis to drive performance improvement
Often athletes, while preparing for a single event, may have a team of coaches who specialise in particular areas, in order to make the whole performance better. For example a triple jumper may have a sprinting coach, a jumping specialist and a psychological expert to get them in the right mindset. Equally in any race at or above 800m athletes will analyse, plan and prepare for the event by breaking it down into sections, and will think about what they may or may not do, depending on the conditions and competition.
So too, with Procurement Performance, practitioners have the opportunity to break down pipeline management into the constituent elements of the process. Most Procurement teams that I have worked with focus primarily on the size of saving rather than how long it will take to deliver it; strange as a month’s delay equates to a loss of 8.3% of the annualised benefit (and even more of the calendarized value, which is often the immediate priority).
By breaking down their process (analysis – negotiation – contracting – transition) and understanding where lead times can be reduced, Procurement teams the world over stand to make major gains. Of course, to be able to do this, the teams need to be measuring it in the first place and this requires the investment in technology. The most advanced teams I have seen are using this to inform where they locate their procurement teams, in order to minimise cost to serve while getting the best customer relationships.
In conclusion, while sporting parallels with business should be used with caution, there is much we can learn from elite athletic performers. By putting in the hard work and the investment, analysing the data and breaking down and improving specific elements, there is a great opportunity for Procurement teams to make a step change in their performance, irrespective of whether they are good, bad or indifferent.
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