Centred on excellence: The role of COEs in procurement

COE/ SSC/ Org StructuresCPOProcess & PerformanceProcurement ExecutiveStrategy & Org Design+-
centre-of-excellence

Centres of excellence (COEs) are a part and parcel of every progressive procurement organisation. In the strict sense, they’re internal bodies that perform knowledge-based services on a one-to-many basis for the function and other related stakeholders.

 

To serve as a performance-enabling powerhouse, COEs should be set up to support across categories and enable the procurement function as a whole, and then specific categories individually. This means the COE should be performing activities such as:

  • Disseminating knowledge in the form of best practices, market intelligence, and more.
  • Looking for opportunities to promote collaboration across category teams.
  • Acting as the clearing house for processes, methodologies, models, and so on.
  • Optimising and homogenising operations and processes, where appropriate.
  • Focusing on enabling innovation and continuous improvement.
  • Establishing and maintaining the metrics and mechanisms to monitor and measure performance.
  • Providing targeted management support for key strategic initiatives.

In fact, with the right model, the COE should act as an incubator that nurtures, cultivates and develops high performers who feed into the broader organisation, “upskilling” as they go along.

 

The practical reality, however, can be quite different with many COEs caught up in more tactical activities. This manifests itself in many different ways. For example:

  • They become “librarians” of information rather than true insight providers.
  • They adopt ‘one-size-fits-all’ solutions to try and solve client problems, what I call the lowest common denominator problem.
  • They spend far too much time managing vendors of tools and resources and less time interacting and understanding how to optimise processes and results.
  • They try to please every internal stakeholder and spread themselves too thinly.

So why does this happen? The problems are mostly down to commitment, resources and discipline.

  • A lack of leadership commitment towards the COE: it’s often an afterthought and is not enabled correctly. If the boss doesn’t really buy it, who else will?
  • The wrong people staffed in roles throughout the COE – often the wrong people insufficient experience and knowledge to do the job.
  • Insufficient resources for the COE charter.
  • A lack of process, structure and rigour in execution – from what you choose to do to when it gets done and for whom – or the ability to say no.
  • Insufficient budget for the necessary tools and resources. While money isn’t everything, it certainly helps to have the right tools to get things done.

Ensuring the success of a COE

Here’s a checklist of what procurement chiefs need to do before they complain their COE isn’t doing its job:

  1. Provide clear and ample executive sponsorship and support – promote the CoE as the A-team to the category leadership and the rest of the procurement organisation, one that enables them to meet their objectives?
  2. Budget for the COE accordingly – staff are enabled with the tools and technologies they need to do a great job.
  3. Bring the right level and quality of people to this team, with the required knowledge as well as specific technical and operational expertise.
  4. Ensure staffing levels are correct.
  5. Acknowledging the fact that budgets will vary and we’re all budget constrained, tailor the COE’s charter to ensure its primary focus areas for a given year or quarter is aligned to what it can actually do.
  6. Tangibly capture customer feedback with regards to the performance of the COE, its team members and their contribution to the procurement vision.

COE leaders and team members can also take the initiative to broaden their horizons and deliver more value, using the following checklist:

  1. Set up performance mechanisms, dashboards and key performance indicator reports that provide more visibility and analytics into both the function overall, as well as individual categories and special projects.
  2. Develop tailored but reusable strategic frameworks for category teams to drive deeper strategy execution – such as category playbooks.
  3. Encourage and facilitate effective cross-category best practice or, as I prefer to call it, better practice sharing to enable learning and continuous improvement.
  4. Develop an inventory of key processes that can be homogenised and optimised, for lack of a better term, to drive more efficiency throughout the procurement organisation.
  5. Develop a mechanism by which to create “purpose-driven disruption”. Look out for resources, assets, tools and technologies that will change the way things are done.

Budgets are tight, finding people is hard and there is a serious amount of work to do. But making a COE work does not mean overinvesting, overspending or over resourcing. It’s about working with what you have, setting the goals upfront, communicating those goals to everyone, measuring against the goals and showing support for a clearly defined agenda.

 

The Smart Cube’s biweekly Inside Procurement series, hosted by Omer Abdullah, covers a range of topics through both podcasts and vodcasts.

 

This contributed article has been written by a guest writer at the invitation of Procurement Leaders.

Omer Abdullah
Posted by Omer Abdullah

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