With the Covid 19 crisis, Steve Will's considers whether it's time to reconsider CLAN and reflects on how procurement will now fit within an organisation.
Some time ago I became acquainted with Dr Richard (Dick) Russill. Dick was originally in the oil industry and now operating internationally as a speaker, mentor and writer on business and procurement issues, Dr Russill, is widely experienced in company leadership roles and in consulting. He is described as 'an unconventional practitioner, wise coach and visionary who transforms business performance and profitability using procurement as the catalyst.' Along with my former mentor Professor Andrew Cox, Dick has probably created some of the biggest impact in terms of developing and promoting the procurement profession.
Dick created CLAN; the Centre-Led Action Network organisational model, as a procurement strategy and organisational structure for large organisations. CLAN was based on a small procurement hub setting strategy which involved gathering information from the centre of the organisation, setting procurement standards and aiming to spread best practise amongst the entire company and all of it’s units, and encouraging opportunities for cooperation, for example with common user items (CUI). The centre would also occasionally make a group business deal itself on behalf of the entire organisation. Otherwise all of the procurement staff sit in the business units and report directly to their managers, with a secondary reporting line to the central procurement setting.
The debate continues in large organisations about Centralised verses Decentralised procurement departments. Would you have all your expertise in one place to serve the operational regions or would you allow the regions to have their own buyers providing a local service for local business?
Each has its merits and flaws. One is an aggregator and provides leverage for the organisation with stronger control and compliance of policies. The other is more agile to respond to the needs of the business at the front line.
Pre Covid-19 crisis, organisational structures were impacted by the development of procurement technology. The growth in capability of sourcing, P2P, spend analytics and other technology changed the view of the optimal organisational structure for a leading-edge procurement function in a large organisation. We must now reconsider the procurement organisation along with our attitude to risk This will have an impact on future procurement structures and roles in every organisation, especially moving forward into a new normal.
To find out more about Procurement Central’s consultancy services, click here . We also highly recommend Dick’s book Route 42, a business book written as a fast-paced novel.