Tag Archives: operating models

There’s A Template For That – Procurement Tools For The Gig Economy

As the workforce bounces back, the gig economy is expected to boom. So how will this mode of employment suit Procurement? We asked Prometheia Procurement CEO Jody Rowe.


COVID-19 has raised many challenging questions about the way in which we work. It’s causing individuals and companies the world over to review their operating models. The procurement profession is not isolated from this and will need to think about the security of supply chains, how we work, who to work with, what an effective operating model is, what systems to use, the questions are endless…

This changing environment is driving the need for procurement solutions to be flexible and virtual, and to provide simple access.  We need processes and tools which empower all users and ensures continuity of knowledge, especially for the gig economy which requires access at any place, at any time.

We are also under a lot of pressure to make smarter decisions that mitigate risk, leveraging the best consulting knowledge in the business, while still ensuring retention of key personnel.

It’s becoming obvious that we now need to embrace open systems that provide instantaneous connection that enables group collaboration and creates a valued global network and access to knowledge.

The drivers of these changes are simple – it’s down to cost and managing risk. The question is how to get things done whilst keeping overheads down and providing real value? The opportunities of enjoying full-time work at one company for the entirety of your career has greatly reduced. Some industries, such as Oil and Gas, are already acutely aware of the steady shift towards the gig economy, which has been driven by both companies’ and individuals’ needs as people seek improved work-life balance.

Do companies need to maintain a large physical footprint or would they be better reducing their liabilities by gaining access to a diverse, flexible and talented workforce when required? As a result of the COVID-19 pandemic, companies have downsized and placed recruitment freezes, yet have still managed to operate effectively. To me, this demonstrates an underutilisation of resource pre-pandemic.

When the rebound from COVID-19 comes, companies will move even more towards the gig economy to meet their needs for short-term contracts and freelance work. With commodity price fluctuations and layoffs continuing, it is likely we will see this kind of marketplace continuing to grow for the foreseeable future. 

In a gig economy, employers have access to a flexible workforce with the appropriate talent available at short notice. There’s no upskilling required as contractors are typically experienced specialists in their field, which can result in projects being completed more efficiently. Contractors often enjoy much greater flexibility in terms of work location, schedule and leave, as well as the excitement and experience obtained moving from one project to another; all of which ultimately adds to their valuable skillset.

Digitisation is paramount for a gig economy to be effective; reliable global access to systems exists and is well-tested. Access to global resources can be sought easily and work can be undertaken anywhere in the world. There are multiple workforce gig economy websites that successfully provide ad-hoc services: you can send a scope, obtain a price and get the work completed.

So why not access procurement in this way?

When you reflect on the way in which we are working in multiple countries – UK consultants working with an Australian client, Australian consultant working with an Indonesian client – you can conclude this new smarter way of working is upon us. Adapting to this change would be pivotal in continuing to deliver value within the Contracts and Procurement function. There’s no denying the function is critical to any business in managing risk, providing strong governance and soundly managing spend.

The answer was to develop a digital platform which provides access to talent across the globe via a flexible and virtual model which provides a cost-effective opportunity to fast track performance, access to procurement professionals that can save time and money, and assistance in managing risk and spend by offering easy-to-use services that can be accessed from anywhere.

And so was born Promitheia Procurement: A comprehensive online procurement tool that provides business with the opportunity to purchase procurement templates and work with online professionals to design any business procurement function to meet their unique requirements.

Procurement Operating Models Explained

Centralised? Centre-led? What’s the difference, and how do I know which operating model is best for my organisation?

Starting a new job can be both stressful and exhilarating. The people are different, the location is strange and the way they work is peculiar to that enterprise. There may be a seven-level procurement organisation chart or a loose, undocumented reporting structure to be navigated.  What is also daunting is the “in-speak”, the specific terminology which may be like a foreign language to you.   Let’s clear up some misconceptions about ways that procurement can be organised, and try and demystify some of the jargon.

 An operating model is just the way the procurement function is set up to work.  Most companies start up being decentralised, unstructured and even disorganised until the workload grows.  As the functions expand and mature, there needs to be some form of formalising and centralising of the activities to consolidate the spend. Only then can we expect to make savings and reduce our risk exposure.

Centralised or centre-led?

Centralised procurement does have its benefits. It means more control over suppliers and contracts and it helps drive supplier diversity and corporate social responsibility (CSR) initiatives.  The risk is mitigated and skills development is made easier, expanding capabilities.  However, it can become a very bureaucratic and expensive cost centre. Too much data and not enough information can cause loss of focus and poor service to stakeholders.  People at the centre do not always understand regional and local supply markets and consumption patterns.  If “central” means the US and the region is Papua New Guinea, there may be cultural challenges too. As procurement organisations move on and mature, over time, many of them become centre-led, taking some time to decentralise personnel and day-to-day operations.

Image: www.zycus.com

Wherever your organisation is on this curve, it is helpful to know what it means to be where.  There is no one best structure. The way your organisation works is influenced by the external supply market, the end-users needs and the overall company strategy. You just have to ride the wave.

 Centre-led procurement organisations concentrate on defining strategy and policy for both their direct and indirect procurement.  Corporate spend can be fully leveraged on strategic commodities and services which are well-suited for centralised sourcing.  Non-strategic categories not suited to centralised sourcing can be handled by the individual business units or regions.

Centre-led procurement uses a category management structure which supports the rollout of sourcing and contracting plans to business unit and regional level.  The type of set-up is often called a hybrid model.

Category management means the bundling of third-party spend into buckets to extract more value.  The main aim behind category management is to aggregate the internal demand and achieve economies of scale by contracting the best suppliers at the lowest price.  In its best form, it involves an active category manager to roll out category plans, strategic sourcing and supplier management initiatives.

In a centre-led organisation, a global category manager would set the strategy for the category group, e.g. transport logistics, and for the sub-categories (also sometimes called commodities) within that group:  road, rail and air transport, freight forwarding, port activities and courier services.  At regional or divisional level, the category plans are followed and executed locally to achieve the best results for the organisation.  This is the ideal but it is rarely implemented in full. Some categories are really challenging. Marketing services, technology and professional fees come to mind.

Cross-functional teams (CFTs)

To be effective, a category needs to be managed using one or more cross-functional teams.  A cross-functional team comprises representatives of key divisions and business units that work together, with procurement, to achieve the best results for the organisation in that category or commodity. Although extensively used in strategic sourcing, CFTs are being used increasingly and successfully across process improvement, product development, quality assurance and the assessment of suppliers.

The benefits are well-documented:  a more robust outcome, transfer of skills and learnings, improved internal cooperation and sustainable relationships.

Global organisations that run virtual CFTs have special challenges.  With the application of innovative methods and up-to-date online technology, it is now easier and more effective.

Whatever the operating model or the make-up of the CFT, the satisfaction of stakeholders and end users is paramount.  A stakeholder is anyone that has a vested interest in the outcome of your project or action.  He or she could be any one of these:

  • An internal departmental executives, manager or end-user
  • Another procurement team member
  • A co-opted subject matter expert
  • A supplier or a subcontractor
  • A member of the media or a regulatory body

Stakeholders are capable of influencing the success or failure of a project.

 The model is not cast in stone

As a procurement organisation matures, it is likely that executives will revise and adjust a hybrid or centre-led structure so that it stays aligned to corporate objectives and continues to deliver value.  The best model is always the one that delivers results through open lines of two-way communication and uses processes that are flexible enough to take into account regional and cultural differences.