The prior global recession and several other critical business factors have put Procurement in the spotlight in recent years. Natural disasters, health epidemics and geopolitical and socioeconomic developments, which create mammoth disruptions or supply chain risks, are a few examples.
Others include highly publicized corporate social responsibility issues, such as the questionable supplier payments practices by some big brands; the horsemeat scandal that engulfed a number of supermarkets; and slave wages and child labour in the supply chain of some clothes retailers.
The demand for better supply management is likely to intensify in the coming years, as organizations of all sorts will seek to avoid brand reputation damage, supply disruptions and other pitfalls from suboptimal supply management.
Procurement functions will need to continuously polish their game to meet expectations and shine!
Here are some top tips for propelling your Procurement success in the years ahead:
➜ Think “PEOPLE” Not Sourcing or Purchasing. It is people that do the real sourcing and purchasing work, not computers, strategies or PowerPoints; so people matter most! Focus on building your people capability, with emphasis on assuring effective leadership alongside enhancing soft skills—the intrapersonal and interpersonal competencies critical to become more organizationally savvy and sell the Procurement agenda with flair. Talent will increasingly become the key differentiating factor between Procurement functions that are pioneers and those that are laggards or mediocre.
➜ Focus on “VALUE” Not Cost Savings. Many Procurement people are frustrated with the challenges of trying to sell Procurement to the wider business, squabbles with territorial stakeholders, and educating those who think the Procurement role is largely about chasing suppliers and delivering “cost savings”. Sharpen your persuasive communication abilities, and think about how you can better educate those around you of the real value of Procurement in the broader business context. Expand your thinking and approach: cost is important but value is king, and “value” exceeds financial benefits.
➜ Forget Fads and Think “EFFECTIVENESS”. It is easy to get caught up in the latest buzzwords and slavishly follow “best practice” approaches that promise to transform your capability overnight, but they never stand the real test of time. Those who seek “procurement excellence” without building underlying effectiveness will discover that you can’t hold water in a sieve. Focus on enhancing effectiveness, i.e., doing the right things to boost your Procurement mojo®.
➜ Think “INTERNAL CUSTOMERS” Not Stakeholders. Think broadly about your Procurement function’s true role and who has a valid stake in what Procurement does. How do your functional priorities reflect your obligations across these different groups? What are you trying to achieve for each of these distinct entities—delight or pain? Remember, every user of externally-supplied materials and services, from stationery to electronic components or other direct materials, is a customer of Procurement! So think of your “stakeholders” as internal customers, treat them as such, and learn to become a trusted business partner who is meaningful in their world.
➜ Embrace “RISK MANAGEMENT and SPRM”. Good sourcing or purchasing is not just about finding dependable suppliers, doing the deal or chasing “savings”; managing the supply pipeline robustly is critical for your organization’s operational, financial and reputational health, your own personal ethics and Procurement’s brand reputation. Adopt sound processes that simplify and strengthen your source-to-pay operations, including supply risk management and Supplier Performance & Relationship Management (SPRM). These will become increasingly critical to safeguard organizational prosperity.
➜ WALK THE WALK, Not Just Talk the Talk. Whether or not you lead a Procurement team, we all have an obligation to support our Procurement function in finding its mojo. You must do your part to address organizational ineffectiveness because it drains value—the very thing Procurement should be delivering to the wider enterprise. Are you doing enough to champion this cause? What more could you do to expand your own effectiveness and boost your Procurement brand? Remember, talk is cheap; it’s walking your talk as a Procurement Ambassador that counts.
