The Procurement Operating Model Mindset Shift to Create Value for Your Organization
In today’s global multinational corporations, procurement is viewed as focused only on cost. A common industry mindset and the traditional procurement operating model is that If procurement saves money, they are doing what they are supposed to do.
It’s the acquisition cost mindset in which price drives all. Here supplier relationships are primarily transactional. The organization tells the supply base what it needs, when it needs it, and where is should be shipped. Plan, buy and expedite. In general, purchase orders are issued and orders are filled. That is the extent of the transaction and the commercial relationship.
That’s a great mindset. If it was still 1995. Our encouragement to procurement executives and leadership is to challenge that assumption and think differently.
What If the Procurement Operating Model Shifts to Become the Innovation Engine for the Organization?
The alternative procurement operating model is to build a Supplier Enabled Innovation mindset.
Strategic thinking informs a mindset that should look to migrate away as fast as you can from cost reduction as the primary measure of success.
What Three Questions Help to Shift the Procurement Operating Model?
- How can your suppliers help you Innovate and Grow?
- How can you structure the business relationships so that your suppliers will help you be successful and you BOTH generate revenue?
- What does your procurement team need to look like and act like to drive supplier enabled innovation as the growth engine to generate revenue for the organization?
Ask those three questions of your procurement leadership peers to begin the ideal procurement operating model journey. It’s that exact mindset shift that turns procurement into an innovation, collaboration and revenue growth engine.
Ready to Learn More and Explore Next Steps for Your Organization?
The Innovation Garage uses Innovation and Growth Mindset skills development with its clients as a business operating system that delivers Center Led Procurement and Supplier Enabled Innovation to drive revenue and growth. Our strategic pillar, Amplify is purpose built and designed to do exactly that.
If you’d like to learn more about practical and meaningful Center Led Procurement and Suppler Enabled Innovation strategies, take that first step by reaching out to us here, or drop an email to [email protected].
At The Innovation Garage®, We help organizations grow. Providing education, tools, technology, and expert consulting in change management for strategy, innovation, and supply chain. Guiding leaders from organizations across the world to intentionally self-disrupt their offerings and organizations. We deliver world-class education, tools, and technology on how to craft business operating systems focused on long-term profitable growth.
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