Back to Capability Building

An advanced-industries company deepens procurement capabilities to master growth and increased complexity

Field and forum capability building yields a host of improvements.

Challenge

An advanced-industries company faced a problem most organizations would find appealing: its revenue was growing, its geographical reach and product line expanding—and there was a significant potential for savings among its various commodity categories. As a result, its procurement department wanted to build a cohesive function and deepen its capabilities because it projected the spend volume to double and the size of its global team to triple in the coming years. The company’s leadership asked McKinsey to analyze and redesign its purchasing capability-building program to maintain high quality and cohesion in the midst of these changes.

Discovery

The McKinsey team used a three-step approach, beginning with a joint review and refinement of the necessary competencies in different job families, roles, and seniority levels. Based on this, the team then mapped the existing learning catalog against the requirements of different roles to identify gaps. They also identified gaps in the current curriculum.

The mapping and needs analysis were followed by a longer implementation phase, during which the team fine-tuned, piloted, and rolled-out the new capability-building program for strategic buyers. The initial tests combined working on concrete, spend-related sourcing projects with on-the-job coaching, formal learning off-site, and formal (review) and informal senior-management interactions.

From a content perspective, the enhanced program provided rich, interactive experiences while also deepening leadership, functional, and behavioral skills. Components included the following subjects:

  • core functional instruction covered each phase of the category-management process, such as waste reduction, use of analytical tools, and negotiations in demanding situations
  • broad-based skills-development sessions addressed management skills such as data analysis, structured problem solving, and communications
  • topics related to behavioral change and leadership included capability building in influencing techniques, as well as a simulation to test negotiation, strategy, and listening skills

Experts in functional and behavioral areas brought external perspectives throughout the program. The varied support allowed participants to apply new ideas and techniques to their team sourcing projects.

The logistics and sequencing of the skills-development sessions were designed to maximize collaboration and standardization, and minimize business disruption. Groups of 20 to 25 employees completed program modules together, and the chief procurement office kicked off each session to reinforce how important the function is to the organization's success.

Impact

Approximately 100 participants have completed the class and have applied their new insights and skills to more than 20 different sourcing projects. Evaluations showed significant improvement in core functional skills, strategic sourcing, opportunity management, leadership, and relationship management.

Finally, while cost savings and other performance improvements were not the primary objectives for the sourcing projects—which were truly intended as opportunities to learn—the vast majority of projects did reduce procurement costs, delivering a significant return on the company's investment.

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