Too often, we’ve observed Operating Partners neglect restructuring Procurement & Supply Chain functions, instead deploying short-term tactics in their efforts to create value. Consultants are hired too quickly, direct material strategic sourcing projects ensue, the Procurement team gets buried in complexity, savings doesn’t flow the bottom line as expected, and the cycle continues with new ownership. Why? The foundation to deliver and sustain long-term procurement equity value was never established or worse, burnt to the ground. To avoid making this mistake, we recommend the following:

1. Build the organization. Ensure the Procurement team is structured to be customer- and value-centric. Align the function as a service provider to the business while delivering YoY savings and working capital improvements, and build capabilities around strategic sourcing, category management, SIOP, etc.
2. Avoid supplier slash & burn. Suppliers despise the traditional PE approach to cost cutting – 3% demand letters, mass consolidation, mandated consignment programs. The pandemic showed us relationships matter – so meet your 80/20 suppliers in person and explore ways to generate cost savings together.
3. Align around customers. Harness the 100-day period to deliver c-suite messaging internally and externally to energize Procurement, functional leaders, and suppliers. Rally them around growing together through delivering more value to customers – via innovation, lead-times, service levels, savings, etc.