How we can realise Procurement's potential?

Procurement is reaching a tipping point. The importance of great sourcing, a well managed supply base and effective risk management has been shown to be paramount to most organisations over the last couple of years. Procurement teams are well placed to cement a central, strategic position.

However, we are also in danger of being a victim of our own success. Business is evolving and moving ever quicker, whilst procurement is getting slower than ever before.?

Lack of resource is compounded by extra workload from our increased profile. Extra process steps to mitigate risk, constant C-Level initiatives and an increase in lower value work are piling on the pressure.

With a reputation for running a lean team and cutting costs, extra investment for procurement isn't always high on the agenda, and there is an expectation that we will work some 'magic' to solve the challenge.

But we've been working at capacity for over two years now, and things are not likely to calm down in the short term.

Given that we have the potential to source trillions of pounds worth of goods and services per year across the world, there should be infinitely more focus on procurement than there currently is. A step change is needed.

So how can we realise the potential of procurement?

Speed up the function

To cover more work, help our business work quicker and realise benefits earlier we need to speed things up! If we're doing something that results in benefits, increased value or serves our customers better - why not do it quicker? If it doesn't - why are we doing it?!

Introducing more agile procurement practices differentiates your organisation from others, and demonstrates to stakeholders that procurement is a valuable and efficient process.?Getting better rapport and outcomes is more likely as suppliers do not feel like they're in a process to 'make up the numbers'.

Reframing Procurement from a lengthy activity to a focussed one is vital. Mirko Kleiner of the Lean Agile Procurement Alliance suggests asking: "What if we only had a day to source this, what would we need to be true?" Reframing in this way helps to focus on what is required to make the decision in the shortest period of time, who needs to be involved, how we make decisions etc.

The answer is increased collaboration between procurement, business stakeholders, legal, finance and suppliers. More-face time, workshops and co-creation.

For lower value work, can procurement be bypassed by using self service? Is there software which can automate repeatable processes? Continuous process improvement, automation, delegation, deletion all help speed up procurement.

Tell the story?

We must speak the language of the business. Our metrics must be aligned to the wider organisation's goals. If they are not, we are irrelevant.?

If we only communicate our savings delivery and functional ROI to justify our existence, we will only be know as a cheap, shadow budget management function that can cut cost when times are tough. The CFO may be interested, but the rest of the C suite will not be.

We need to talk to values of each leader. How we're speeding up the business, impacting strategic programmes, saving stakeholder time, driving customer-facing innovation, sourcing innovative suppliers for the business etc etc etc.

KPIs should be communicated in an effective visual format - with a report tailored to each senior leader.

We have a great story to tell - we must tell it in the right way.

Use technology better?

Our systems must be people-centric - jargon free and easy to use.

But rather than of focussing on technology, we must ensure we have a solid data foundation, great user experience and deep process alignment first.

Once the operational foundations of P2P etc are covered we can sort our other data requirements: Activity, Spend, Contracts and Supplier Information. Some of these may sit in other teams but are vital for procurement so we must take ownership and have a process to keep this data up to date and accurate.

Current gaps such as Procurement Activity and Pipeline data, which drives functional excellence must be systemised - Excel is no longer an option.

By experimenting with new technology as it comes along we can stay ahead of our competition. Keep an annual budget for new tech, try out and be prepared to stop if it's not working. Appoint Product Managers to each capability - responsible for optimising the use of technology in each area (e.g. spend, P2P, activity, contracts etc)

Attract and retain great people

Great people are the bedrock of great Procurement. No matter how good your systems, processes and data are, without the right people you will struggle to deliver for your organisation.

Leaders must do everything they can to attract, develop and retain the best talent. A clear purpose, or 'why' you do what you do (aligned to your organisations 'why') is a must to get people motivated and working together to achieve.

A longer term strategy, owned by the team, sitting above the day-to-day activity, reenforces and crystallises the purpose into tangible action.?

Talk about this outside of your organisation - on LinkedIn, at events, on blogs and podcasts. This is the way to attract the right people who believe what you believe.?

Investment in training, facilities and great systems plus time spent coaching, fostering executive relationships and team building is also vital. We cannot grow without investing time and money.

Focus on relationships

The most valuable aspect of procurement is the relationships we form across our organisation, peers and the market. In a fast moving environment knowing the right person or company for a job, requirement or advice makes us indispensable.

Building relationships across our businesses, on LinkedIn and in the market place is a really important skill. Talking to suppliers even when we have no requirement helps to build great relationships and understanding.

We must focus on our influence and the value of our relationships over mandating processes and control.?

Corporate conscience?

Rather than controlling corporate initiatives that don't have a clear home, we should be the conscience of the organisation - driving the triple bottom line of People, Planet and Profit.

Without budgetary responsibility, we are not accountable for how the business spends its money - but we can use our influence to challenge poor allocation of resources. Our aim should be to ensure great value in the money that is spent.

Similarly with ESG - this should be in the DNA of our organisation. It cannot be seen solely as a Procurement Initiative - but we should make sure that it reaches its rightful place.

Other initiatives that have fallen through the cracks (Data Protection, Cyber security screening etc) should find their way back to their rightful homes.

Be more proactive

In order to be more proactive we must have more forward looking data and a clear view of our pipeline. Approaching business teams to discuss renewals well ahead of time shows we are on top of business and ensures that we talking at the right time so we can do the best job in sourcing a renewal.?

Helping to source new suppliers by proactively meeting prospective suppliers before a need arises shows stakeholders that we have a great understanding of the marketplace and is a good investment of time. Spend time on four 30 minute meetings per week or per fortnight, the learnings gained are well worth it.

An exciting future

It's a great time to be in procurement and we are well placed to forge an exciting role in the enterprise of the future.

I founded Acada to help realise the potential of procurement. We work with forward-thinking procurement teams who want to increase their impact.

What do you think of this article? Please leave a comment or drop me a message - I'd love to hear your thoughts.

Thanks, Rich