“There may be many reasons,” she says.
The procurement function may have:
• not aligned itself with the organisation’s strategy and goals;
• not identified its most important stakeholders;
• not taken relationship building seriously; or
• failed to establish its identity and credibility through results.
We must be able to do better with developing our internal relationships for the benefit of the sustainability of the organisation.
But sometimes we are our own worst enemies.
By focusing only on cost savings and ignoring the opportunity to improve efficiencies and add value, we lose credibility. The aim of business is to increase bottom line returns, not just generate procurement savings.
A recent study found that “reporting” was the main activity of procurement personnel. Reporting — defined as relaying, in detail, savings statistics to the finance department — is critical to procurement’s continued operation.
Little more than half of procurement departments are doing anything more than simple reporting in order to promote their internal value in their organisations.
The study also found that procurement departments’ own perceptions of their value are significantly higher than their actual valuation by their businesses.
How non-procurement staff view the procurement function internally varies and it is not all good. Perception = Reality. Let’s look at some tips on how to uplift that image.
Act like a marketer
We usually tell people how good we are at spend analysis, counting savings, managing compliance or writing requests for quotations. Most internal customers don’t really care about that; they want to see us making a difference in taking the organisation forward.
Hear what your internal customers need and work with them to deliver it, not by giving them what you think they need. The sales team is concerned about speed-to-market.
Be a champion for innovation
Listen to your suppliers when they come with ideas for improvement. It may be streamlining the admin, shortening delivery times or making changes to the product or service. Make sure you direct the suggestions to someone who can do something about it, don’t let ideas die in the corridors of procurement. This is a common complaint by suppliers.
Build your capability
Your stakeholders need to know that you are constantly upgrading your skill set to service their needs. Focus on improving their understanding of the role procurement can play in making their lives easier and making them look good. One way to do this is to learn the business by doing the jobs alongside your internal client.
A work spell in a key operational division can also enhance your career prospects.
Contribute to competitive advantage in your business
Start thinking differently. Be a profit centre instead of a cost centre.
When you do look at price, focus on the total cost of ownership, not the headline price and make sure you maintain or improve quality of the goods or the service.
Work out how to develop relationships with your suppliers, show that you can improve the cash flow and speed up steps in the procure-pay-process. Time is money.
The key to improving the image of procurement is to understand your stakeholders’ needs and drivers and adapting your outputs and key success factors to these. Get involved in projects early and volunteer your assistance to help develop specifications and formulate the plans for their desired outcome. Trust will develop over time if you are working towards a common agenda.
Why do we not actively promote what the supply management function does for the business? Procurement must communicate its value, again and again, to the right people, at the right time, and in the right language. We can’t wait to be discovered.
Elaine Porteous is a business writer and commentator on supply chain and talent management. Contact her on email@example.com or www.elaineporteous.com.