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Procurement by Design

Strategic Foundations

The first time in my career I was asked to build a procurement department from scratch, I genuinely thought there would be a clear framework somewhere.

A proper, end-to-end guide, or a book on how to design the function, but I really couldn’t find anything at the time. There were books on negotiation, on category management, on savings. The true strategy books that can be found cost the equivalent to the GDP of a small island. There was almost nothing on how to architect procurement as a system, especially in a world shaped by data and technology. So I learned by building it.

And even if you’re new to procurement, understanding how strategy is set up matters, because it shapes every decision you’ll make long before you’re senior enough to influence it. So here is all the advice I wish I had all those years ago.

When you create a procurement strategy from scratch, you’re not writing a simple vision statement. You’re making a series of trade-offs about how your organisation will buy, who will make decisions, what risks you will tolerate, and what you are optimising for. Is it Cost? Speed? Innovation? Or compliance? You cannot maximise all of them at once, and pretending you can is how you might be most likely to fail.

Across three very different organisations, I’ve learned that if you don’t design the foundations properly, even a ton of clever sourcing events won’t save you. For me, those foundations always come back to five pillars: people, systems, governance, data and process. Miss one, and the whole thing wobbles.

1. I start with people, always

It’s tempting to begin with category plans and savings targets. I don’t anymore. I start with the operating model. You can do procurement without systems, data or even good processes, but you cannot do it without people.

Research in operating model design consistently shows that clarity of roles and decision rights has a stronger impact on performance than structure alone. A centralised team without authority is pointless. A decentralised model without set standards is a mess . The answer is rarely one or the other; it’s about explicitly defining which decisions sit centrally and which stay with the business.

When I build from scratch, I ask:

• Are we transactional, strategic, or a mixture?

• Do we expect category ownership?

• Where do supplier relationships live?

• Who signs contracts?

• Who owns risk?

Then I look at skills with brutal honesty.

The CIPS Global Standard for Procurement and Supply and multiple McKinsey capability studies all point to the same gap: organisations overestimate technical sourcing skills and underestimate commercial, analytical and stakeholder capability. In every rebuild I’ve done, the real bottleneck weren’t basic procurement skills but the team’s commercial confidence and data literacy.

So I map skills against what the strategy actually requires. If we want more innovation from suppliers, do we have people who can run supplier collaboration sessions? If we want tighter cost control, can the team build should-cost models? If we expect category strategies, do we have anyone who has written one before?

From there, the plan becomes practical:

• Targeted training

• Selective recruitment where capability gaps are structural

• Clear progression paths so the team understands what “good” looks like.

I’ve learned the hard way that you cannot outsource capability building forever (though Accenture might have you believe otherwise). At some point, if you want a strategic function, you have to build strategic people.

2. Systems are only enablers

I once had a client who wanted to find out if they should buy a fancy, very complex and expensive Supplier Performance & Risk tool. But they had no processes in place and no people doing the job currently which would have deemed the tool pointless. Every time I’ve built from scratch, someone has wanted to start with the system.

Which P2P tool? Which sourcing platform? Which contract repository?

Technology matters, but research from Gartner and Deloitte consistently shows that digital procurement transformation fails most often because of misalignment between process, governance and system configuration. In other words, the tool is rarely the problem. The design is.

When I approach systems, I ask one question first:

What behaviour are we trying to drive?

If we want compliance, the process needs to be easier inside the system than outside it. If we want speed, approval chains need to be designed for flow, not control theatre. If we want visibility, data fields must be mandatory and meaningful.

I also separate core from advanced capability. In a greenfield build, you don’t need everything on day one. You need:

• A clean requisition-to-order process.

• Clear approval workflows.

• Basic supplier onboarding controls.

• A single source of truth for contracts.

That is it. Don’t over complicate it. Advanced analytics and AI-enabled insights only work if your foundational data is clean. I’ve seen too many organisations buy sophisticated tools to analyse data that isn’t standardised.

I usually design systems in phases:

1. Stabilise and standardise.

2. Automate and simplify.

3. Optimise and analyse.

It keeps the ambition grounded.

3. Governance is where strategy becomes important

I truly feel that although governance sounds dry, this is where the strategy either holds or collapses.

Clarity of decision rights and escalation pathways reduces friction within procurement and increases compliance more effectively than additional layers of approval. More signatures do not equal more control.

In practice, governance means answering:

• What requires procurement involvement?

• At what thresholds?

• Who can approve what?

• What are the non-negotiables?

In one of my rebuilds, we had policies, but they were broad and open to interpretation. That meant every difficult decision became a debate with my CFO or stakeholder. When we rewrote governance with explicit financial thresholds, risk triggers and category-specific rules, ambiguity reduced overnight.

I also learned that governance must be proportionate. If you apply the same control intensity to low-value, low-risk spend as you do to strategic outsourcing, you slow the business down and erode trust. A risk-based model works far better:

• Low value, low risk: guided buying, minimal intervention.

• Medium value or moderate risk: procurement support.

• High value or strategic risk: mandatory category involvement and formal sourcing.

The key is making the rationale visible. People accept control when they understand why it exists.

4. Data is the “uncomfortable truth”

In a big part of the companies I’ve worked with in my 20 year or so career, the first spend report was always wrong.

Supplier names duplicated, with badly categorised spend and whole chunks of spend invisible. And yet, many procurement departments continue strategy discussions as if the numbers are precise.

Research from The Hackett Group consistently highlights spend visibility as one of the strongest predictors of procurement maturity. But visibility is not just having a dashboard, you also need confidence in the underlying data.

So I approach data in layers:

Layer one: Classification

• Clean supplier master data

• Consistent taxonomy (I have built a couple of these from scratch!)

• Agreed category structure

Layer two: Visibility

• Total addressable spend

• Managed vs unmanaged

• Contracted vs off-contract

Layer three: Insight

• Price variance

• Demand patterns

• Concentration risk

Only when layer one is solid does layer three become meaningful.

I’ve also learned that data is powerful to change conversations. When stakeholders see where their spend sits compared to peers, their behaviour often shifts for the better.

5. Process design is where you see corporate culture

You can tell a lot about an organisation by its procurement process.

When designing from scratch, I resist the temptation to replicate “best practice” blindly. Academic literature on process standardisation shows that while standardisation increases efficiency, over-standardisation can reduce adaptability and innovation. The balance matters.

So I design core processes around clarity and repeatability:

• Category strategy framework

• Sourcing methodology with defined stages

• Contract lifecycle steps

• Supplier performance review cadence

But I also leave room for judgement. Not every sourcing event needs the same number of bidders and not every contract needs the same negotiation intensity.

One of the most important decisions I always make is defining when procurement can say no early. That boundary shapes culture much more strongly than any template or any policy you can build.

Pulling it together: the strategy is the alignment

When I look back at the three times I’ve done this, the biggest lesson is that procurement strategy is not the word document you end up with. It is the alignment across these five pillars above

People without systems —> burnout
Systems without governance —> workarounds
Governance without data —> argument
Data without process —> mess
Process without capable people —> box-ticking

When they align procurement starts shaping decisions earlier. You can hear conversations move from “why are you blocking this?” to “how do we structure this properly?”

If I were doing it again tomorrow, I would still start the same way.

Building from scratch is hard. But it’s also one of the few moments where you get to define what procurement actually stands for in your organisation.

And that, in my experience, is far more powerful than any template.

Freebie(s) of the week

There’s something that has always frustrated me which I’ve been guilty of it myself more than once.

In procurement, we invest weeks negotiating contracts, aligning stakeholders, pushing suppliers on price and scope, and then once the ink is dry… supplier management becomes strangely unstructured.

We “catch up” quarterly and discuss issues. Then three months later, we are having almost the same conversation again.

Usually this means you haven’t got a standard process around this. I have found even large clients I’ve worked with don’t sometimes. And also because there is no shared framework holding it all together.

So I’ve really happy to have collaborated with my friend Celia for this week’s freebie!

She has spent 16 years managing suppliers at PepsiCo, Nestlé and Danone, to bring you a free QBR Supplier Scorecard template built on her SGAR methodology. I’m genuinely grateful she agreed to share it publicly because most of what works inside large enterprises never makes it outside.

I thought her template was brilliant and it can help you turn messy unstructured QBRs into something measurable and accountable.

You can download for free here.

And if, after using it, you’re curious where your wider vendor management approach might have gaps, Celia also has a quick 2-minute diagnostic that scores you across Strategy, Governance, Assessment and Relationship and gives you a tailored 90-day plan.

Do you want access to other great templates from previous newsletters? Have a look at the full store below:

That’s it for this week.

Before I go, I’ll leave you with this:

It’s not famous and you won’t see it engraved on mugs. But in procurement I found it to be so true.

The minute our performance becomes visible, it becomes discussable.

And the second it becomes discussable, it becomes improvable

Until next time

Procurement worth reading.