Times are, indeed, changing with the procurement function becoming increasingly important as a conduit, an orchestrator if you will, for the co-creation of value with suppliers and internal stakeholders as well as right down the value chain to end-consumers and back again.
Procurement can no longer rest its case on ‘lowest cost’, ‘cheapest price’ or ‘supply of goods and services’; it must assume responsibility for the creation and delivery of real value beyond price and general supply.
This sales trend highlights how the skills, knowledge and mindset of procurement professionals are being expanded to include the capabilities of highly-competent solutions sales professionals.
The latest white papers, running commentary threads on LinkedIn procurement groups across the world, and procurement conferences and education bodies are all pointing towards procurement coming of age as a value creator and provider.
Nigel Wardropper, Managing Director, BTTB Marketing, and event director for the unique one-day event, Decoding the buyer – unlocking the secrets of selling to procurement, says: “in business today, value is about more than monetary worth. It is about fitness for purpose, meeting needs and building reputation. And just as procurement has been expected to deal with cost, risk and change, it is also called upon to deliver value at every level”.
Wardropper further goes on to say that “the focus has shifted from cost avoidance, risk mitigation and compliance to pro-actively adding value and helping organisations do more with less – and do so quicker and more reliably in line with community expectations, government regulations and shareholder demands”.
So, procurement has a choice – it can choose to be either a roadblock or a conduit to innovation, ideas and viable solutions that will ensure company, shareholder, supplier and customer success.
Smart procurement professionals, their teams and the organisations they operate in are taking advantage of this by engaging all stakeholders across the entire value chain. They recognise that they need to reposition and rebrand the function and value of procurement.
However, many companies are lagging behind – the current reputation and perception of procurement by most suppliers and internal stakeholders is not good. Procurement is finding it hard to get traction and an audience with key internal stakeholders who are not seeing procurement as adding any value or, at worse, being an impediment to progress. Many departments and supplier sales teams are finding ways to sidestep procurement so that they can get to talk to each other about the ‘right stuff’ to help them achieve their goals and objectives.
Therefore, procurement needs to move from being perceived as an operational revenue absorbing department to becoming advisers, partners and solution providers with internal departments as well as with suppliers.
Whether procurement is seen as an operational revenue absorbing role or an advisory role would depend on how well procurement positions itself throughout an organisation across the value chain.
What does this mean for supplier sales teams?
Hopefully, it means viable relationships based on trust, transparency and real results, unlike the ones they have had to put up with over the last 20 years or so. Smart procurement professionals will see suppliers as having a real stake in the organisation’s success – they will need suppliers’ sales teams working with them, bringing knowledge, experience, ideas and innovations that will likely see the salesperson understanding more about their area of supply than procurement does.
Procurement must realise that they will need to bring the suppliers’ expertise and innovations to internal stakeholders to help them not only meet the organisation’s needs but, more importantly, allow the organisation to meet the needs of their customers.
Wardropper says that “the co-creation of value with suppliers has the potential to go even further – to benefit not just ourselves and our customers, but ultimately our suppliers, and even their suppliers. Working at the heart of category management as a team, with our suppliers and their suppliers, to put together a value chain to serve a common end-consumer can offer greater value for all. In effect, competing against other supply chains”.
Remember, everybody lives by selling something.