Leading organizations that remain successful and deliver superior financial performance recognize the power of effective purchasing. They invest in boosting their Procurement capability to sustain competitive advantage. But these organizations form a small minority. The majority of Procurement functions today struggle to deliver sustainable business results and suffer low esteem in the wider enterprise.
Procurement people in such organizations are frustrated by the problems this brings, e.g., territorial stakeholders who don’t recognize Procurement’s value potential; Finance folks who think Procurement savings is all smoke-and-mirrors; and senior executives who think purchasing is about cost savings, chasing suppliers and other rudimentary tasks.
Such situations end up creating all sorts of operational problems, such as product or service quality failures and cost overruns, and, quite often, Procurement has to pick up the pieces!
Many of us experience these challenges day in, day out. And social media forums and trade publications indicate that the organizational existence of the average Procurement practitioner is hampered by such problems. For example:
- An Iasta© survey in 2012 revealed that almost half of procurement professionals indicated “a lack of culture that accepts Procurement as strategic” as the number one roadblock hindering their success
- In a poll in Supply Management magazine, 72% of practitioners said that enhancing Procurement’s profile within their organizations remains a major challenge.
Clearly, Procurement is not yet as widely-embedded in the fabric of most organizations as we would like. It appears the biggest frustration Procurement people face is the lack of appreciation of their value-add, and being “denied” the opportunity to showcase their capability. As one buyer put it in a blog post, “Why should I have to constantly fight to be allowed to do my job?!”
Why indeed?
But here’s something else to ponder: would you show up at a gunfight with a knife?
Few of us would. So why moan about the organizational context Procurement has to operate in? Our focus should instead be on being properly equipped for success, by taking the right actions to achieve what we want, i.e., by becoming more effective.
Most purchasing people agree that what Procurement wants boils down to enhanced capability and better recognition across the wider organization. If delivering bucket-loads of savings, or, in addition, having sexy sourcing strategies and a slick P2P process, does not enhance Procurement’s capability and profile in the enterprise then these are not the right things to give priority focus to. It’s no surprise that many Procurement functions end up going through transformation after transformation.
When you examine the challenges most Procurement functions struggle with they all relate to “people”—whether it’s territorial stakeholders; short-sighted or egotistical senior executives; or even the competencies, behavioural attitudes and thinking patterns of Procurement staff. These “soft” issues are the root-causes of the problems that prevent most Procurement functions from firing on all cylinders.
Procurement functions that achieve long-term performance success and kudos in the enterprise are adept at navigating such organizational challenges. They recognize that purchasing is a people-centric activity and they’ve upped their game by:
- Building people capability inside the function, and
- Nurturing a credible Procurement brand with people outside the function.
Building People Capability
Many Procurement leaders invest inadequate time and energy on inspiring and developing their people. They forget that Procurement functions, like all organizations, are about people first and foremost; so people matter most.
It is people who do the work and deliver results; not computers, strategies or processes. Those things are simply tools or enablers we employ to get the work done. You can never achieve lasting Procurement success without building your people capability, because people are the lifeblood of any Procurement function.
Building people capability means ensuring Procurement has the right calibre of individuals, who understand how their actions bolster the function’s success and its reputation.
This isn’t about having a team of purchasing geeks with high technical expertise, such as category management or strategic sourcing. Rather it’s about attitudes as well as aptitudes. Having sound technical knowledge is of limited value if you’re unable to exploit that knowledge successfully because you’re not organizationally savvy. To educate stakeholders across the enterprise and create alignment with the Procurement agenda you must be able to “connect” with a diverse range of personality types and win them over—you must have highly developed soft skills; competencies that enable you to navigate organizational dynamics with flair.
The most effective purchasing people are those with great soft skills—attributes like persuasive communication, self-leadership, influencing, results-orientation, and emotional intelligence.
Think of technical purchasing skills as “qualifiers”—skills that simply qualify you to play in the purchasing sandpit. Whereas soft skills are “order-winners”, the key intrapersonal and interpersonal competences that enable you to excel in the job. You can’t possibly be a half-decent professional without the right technical skills. But to be effective and outclass your average peers you must have highly-developed soft skills.
A great bunch of talented Procurement individuals without adequate focus and alignment is a recipe for frustration. Thus, it is also vital to ensure the Procurement team has clarity of purpose. This is best achieved through defined functional goals, which must be aligned to the corporate agenda.
Having appropriate functional objectives is a requisite conduit to make Procurement more meaningful across the enterprise. Importantly, Procurement objectives must be SMART—Specific, Measurable, Achievable, Relevant and Time-bound.
Successful attainment of these objectives is only possible when the functional leadership is effective and the performance management approach is robust. Some key tips here include:
- Make sure employees’ work efforts are aligned to the enterprise by disaggregating the defined functional goals into individual objectives that are just as SMART
- Calibrate Procurement folks to understand that “performance” is not just about the numbers or hard, tangible results. How we go about achieving the numbers (the behaviours and attitudes we exhibit) is as important as what we achieve
- Ensure the Procurement organizational structure is sensible, with clear ownership for all aspects of functional responsibility and defined interfaces between job roles
- Foster a progressive culture that reflects the desired values. The culture is the DNA of the Procurement function—it shows what we stand for. Yet it is our attitudes and behaviours at an individual level that shape the culture in Procurement.
Building people capability in Procurement ensures the function has talented and engaged staff. They must be attuned to the perceptions of others outside the function, and how those perceptions impact efforts to embed Procurement in the fabric of the enterprise—they must be aware of the Procurement brand and how their behaviours nurture it.
Nurturing the Procurement Brand
Brand awareness is not something we associate with Procurement. Yet it is critical for Procurement success, especially when we consider the suboptimal reputation Procurement still has in many organizations.
Blog comments and trade publications indicate that people outside the function often feel that dealing with Procurement is exasperating. One trade survey reported that almost 40% of finance directors view Procurement’s influence as detrimental or, at best, neutral. Another trade report in 2012 publicized survey findings that less than 10% of senior leaders in Fortune 1000 businesses regarded Procurement as a strategic unit. If this is the view of senior executives (the most influential stakeholders), is it surprising that Procurement has to fight for its rightful place in the enterprise?
Like it or not, perception can sometimes be more important than reality. That’s why successful consumer product brands invest significant resources in creating positive perceptions of their brands.
Procurement folks can learn a lot from this. People outside the function are more likely to be open to your ideas, buy into your agenda or become champions of your cause if they hold positive perceptions of you and your function. Positive perceptions don’t occur by accident or luck, but by dedicated effort.
It’s pointless getting into squabbles with stakeholders who hold misconceptions of Procurement, and, inadvertently, engendering negative emotions. It is far more effective to get to understand these folks, and direct more effort at managing their perceptions and fostering progressive relationships. The more stakeholders feel that Procurement is meaningful to their challenges, the better Procurement’s brand reputation.
By propagating positive perceptions of Procurement and its potential contribution, you’re cultivating a strong Procurement brand. Achieving this requires that we delve into stakeholders’ views and feelings—how they see the world at large and Procurement in particular, and why. A critical requirement here is to change your own view of stakeholders; think of them as “customers” instead—after all, every user of third-party-sourced materials and services is a customer of Procurement.
So, if you were running your own business and your stakeholders were your customers, how would you handle them, knowing they are the source of your daily bread?
You would probably adopt a more customer-centric approach to sustain constructive relationships, which clears the way to leverage your technical expertise more effectively. Using this approach is how we delight “customers” across the enterprise and nurture a positive Procurement brand. You become more organizationally savvy when you combine this with astute marketing tactics, such as:
- Incorporate customer-centricity in all that Procurement does. Instill this philosophy through Procurement job specifications, encouraging staff to spend time on “customer relationship management”, and imbibing internal customer satisfaction to Procurement goals, performance measures and personnel objectives.
- Develop interpersonal savvy to “connect” with individual stakeholders at an emotional level and build affinity. Think about your most difficult stakeholder, for example; how much do you know about them as a fellow individual like you? Show more interest in them as a person—you’ll be astounded how personal chemistry yields positive business results.
- Get close to internal customers to develop insights on what’s important to them, build credibility, and use persuasive communication to educate them on how the Procurement agenda helps address their challenges.
- Utilize astute PR to propagate a positive image of Procurement across the enterprise, e.g., through stories on the intranet site, newsletters, periodic executive update briefings, etc.
- Remember, as a purchasing person YOU are a “Procurement Ambassador”. So ensure that everything you say or do creates a positive perception of Procurement as a credible “business partner”function.
Procurement success demands functional effectiveness—doing the right things to get the desired outcomes. As I explain in my new book, Procurement Mojo®, the right things are not always the most popular actions. Yet if you examine instances of Procurement functions achieving their mojo—delivering sustainable success for the individual, the function and the enterprise—you will find the embodiment of the practices outlined above.
Organizations are about people, first and foremost. The more you master your people-centric capabilities—the “soft” competencies that underpin personal effectiveness—the more you build pathways to sustainable success for your Procurement function.
