How Can We Make Procurement More Relatable?
As a procurement professional, does this ever happen to you?
You make an acquaintance and are having the typical getting-to-know-you conversation. The “what do you do?” query is posed, to which you reply, “I’m a procurement consultant.”
I am usually met with a blank stare, glazed eyes, and the polite conversation redirects on to something - literally anything - else.
This reaction can be far better than when I’m meeting with a category stakeholder for the first time. They’re usually familiar with procurement and, based on our historical role of reducing costs, are not exactly enthused to be working with us. In some cases, they’re resistant and protective – thinking that we’re there to slash budgets.
In reality, we’re there to provide market intelligence, guidance in the negotiation process, insights to help improve contract compliance, and support to help them achieve a level of control over their spending.
Within procurement, there's a substantial brand image challenge, one that can prevent us from effectively collaborating with business groups across an organization. Combatting this means procurement teams need to shift their mindset from focusing solely on cost reduction to seeing the bigger picture of how their role enhances the enterprise, drives toward a shared goal with stakeholders, and communicates that value accordingly.
The value of procurement - and more specifically, strategic sourcing - is generally understood by the rank and file within a procurement department, and increasingly acknowledged by senior management. Procurement has moved from a nice-to-have, seldom listened to department relegated under the CFO to a critical, core business necessity in many corporations. Simply put, if you aren’t strategically acquiring goods and services, you're losing money.
It's time that business operations understand that procurement departments are critical to the success of an organization, no matter its size.
In today’s climate of mass mergers and acquisitions, a procurement team is more valuable than ever to a business. Procurement departments are tasked with sifting through the contracts and usage reports to understand the buying habits of legacy organizations with the end goal of knitting together a new, cost-effective purchasing program for the combined entity.
Without leveraging procurement’s expertise in negotiation tactics and ways to optimize purchasing power, the benefits of merging business operations cannot be fully realized. A quality procurement department can bring visibility to spending habits across locations, departments, and business units; having this visibility before a merger or acquisition can make the process flow much more smoothly.
Procurement is not just processing POs and ensuring contractual compliance. Procurement’s key value is enhancing relationships with suppliers, maximizing the mutual benefits for all parties.
Historically, procurement was thought of as cost-cutting or a roadblock to buying necessary goods and services. This simply is not the case today; procurement has evolved to be a critical part of scaling up a business or merging organizations. This evolution means procurement departments need to be measured by more than just cost reduction metrics. We need to rethink how to communicate the value of procurement.
Procurement is picking speed in terms of becoming more integral to business operations. Stakeholder teams don’t have a choice and have to work with procurement, but that doesn’t mean the relationship has to be adversarial. It all starts with us.
From an individual level, in the way we talk about our roles, to the way our executive teams talk about the role of procurement in the enterprise – we have the power to change how procurement is perceived. By changing how procurement is perceived, enterprises can fully realize the strategic potential of the function.
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