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The Changing Face of Procurement
By Jason Cammorata, Vice President, Strategic Sourcing, MDC Partners
Now, some may get a funny feeling in their stomach when they hear procurement is involved. Internally Procurement may be known to cause process bottlenecks, not truly understanding the “stakeholder’s” category and when the job’s done, claiming the credit. Sales side may get that funny feeling too because they think they will be commoditized and judged solely on the cost savings they provide vs the services they provide and the relationships they’ve worked hard to build. And they’re probably right. Perhaps, when we are truly effective, everyone will get that funny feeling in their stomach if they hear Procurement is NOT involved.
For those like sales who need to work with procurement, you should know something about it. I encourage those to even learn the lingo. We’ll be very impressed. Understand what procurement needs to get their job done and help them do it.
Don’t allow yourself or your team to be measured by a cost savings tracker alone. Savings is the core of what we do but value creation is what we should be most passionate about
If you feel procurement doesn’t understand your point of view or what you’re selling, help them understand. Most importantly, understand how to quantify value. After-all, we typically have to sell too. We sell internally.
While Procurement’s price chopping skills can be quite effective, procurement has evolved. It should no longer be about the cheapest or most efficient. We now (should) think about things like employee retention metrics. We may even recommend spending more on something if it provides speed to market or a competitive advantage for us or our clients. We push innovation vs cringe and we encourage our suppliers to help us innovate. We’re passionate about progress and doing things differently. While we believe cost savings is at the core of what procurement does daily, providing value beyond cost savings actually does more for the business.
That said, procurement IS under tremendous pressure by finance to produce cost savings and to quantify their value. Could the danger be procurement spending more time proving their value by tracking vs actually providing it?
Perhaps we should imbed more skills and a good procurement process within the actual categories’ departments making these departments accountable to cost savings vs an independent procurement run process outside of the actual department. This frees time to move to strategic value creation, which should never stop. How procurement provides actual value can be subjective according to the value seeker. There are some general guidelines I like to consider which are steps procurement and others can take to further their value:
Don’t allow yourself or your team to be measured by a cost savings tracker alone. Savings is the core of what we do but value creation is what we should be most passionate about.
Be a provider of data. As a receiver of data, it’s our responsibility to give it back to the business.
Provide clear communication. Use facts and keep things simple.
Don’t overpromise. Always overdeliver.
“Colleagues” vs “Stakeholders.” Who actually wants to be named a stakeholder?
Call vendors what you want them to be: Partners
Make your Colleagues shine more than yourself
Be a truth finder vs a negotiator
As a perpetual truthfinder I find that more and more of my time is spent having conversations rather than negotiating. Our conversations are just as much internal as external. As a result, I’m finding demand for our team’s time is greater as together we define how the business quantifies value. We then deliver accordingly acting as business owners vs just procurement providing and then proving cost savings.