Article 1 - Published to CIPS Fellows, October 2013
What do you think our key stakeholders really want from their Procurement function? A short article - keen to understand hear your comments and observations...
Over recent years I’ve noticed some evolving themes about what our key stakeholders want from us. It also strikes me that as we enter a nascent recovery, now is an opportune time for Procurement to make the most of the opportunity and offer something more to our businesses. What are your comments and observations?
We all spend our time in Procurement performing to our ever evolving professional staples; processes which quality assure our work, create savings and protect the business. Most likely, our bosses will suggest that’s “what they pay us for”; others might suggest we’re just “covering our backsides”, or worse! With the blurring of boundaries between functions in business today, other executives don’t want know about our internal processes; they want know what we can do to help the business grow profitably.
We’ve all worked the routine numerous times. We’ve segmented the supplier base, we’ve done our supplier preferencing and our Porters five forces; we’ve even got fully resourced Category team. We’ve built a 74-step Procurement process, and we’re using the latest World Class eProcurement tools! The business is protected with supply chain contingencies in place; so if some unpronouncable volcano erupts, we’re ready! Price benchmarks are performed every lunchtime and demonstrate what a great job our buyers are doing. We’re running e-Auctions left right and centre, and even the contracts cupboard is clearly labeled in a fire protected safe!
However, one suspects that our stakeholders remain unimpressed. The challenge for Procurement today is to move past all these “hygiene factors” as others might call them. They’ll recognize the value we provide in Savings, Risk protection, and Cost Avoidance…and we might even get a seat at the table. If we want to be recognized as valued contributors we need to do something more.
We need to help enable profitable growth – primarily for our employer, and by extension, for our suppliers.
To do this we need to ensure we perform two key tasks. We must:-
• engage closely with our stakeholders, and,
• communicate our business needs with the external market.
Firstly, we must work closely with our colleagues to understand our business’ and internal customers strategies, direction, and day to day challenges. We should treat this like the new “first rule of purchasing”! This means being part of the management team, focusing on the outcomes and problems our Operational, Finance, Sales and Marketing teams need addressed. We need to take these issues to the supply base and determine focused actions to achieve these outcomes. Which brings me to the second task, communicating with the market.
We need to communicate the aims and outcomes our business needs to achieve with the marketplace. In other words, select and collaborate with the best suppliers; those whose own objectives align to ours. We need clear conversations with our suppliers about our business objectives and their own, without which all collaborations will fail. Suppliers have more than one market to support and it’s for us ensure we get a level of involvement our businesses require.
Working in true partnership with our key suppliers (not the clichéd “partnership” of business speak, which often leaves suppliers worse off!) to help their businesses grow, driving cost out, bringing new products and services, and sharing the benefits equitably. This may be through ensuring suppliers bring their best ideas and innovation to our business first, or by bringing their workers knowledge of how to take cost out of an activity.
If we do these two things, then we’ll be able to respond to our colleagues needs, solve their problems and most importantly, improve our company returns. Through helping our business and our suppliers to grow, we’ll also be doing our part in pulling our country out of this recession and into steady, healthy, profitable, growth!