A recent article from Chief Executive.net doesn’t pull any punches when it comes to perceptions of procurement. The writers describe the function as an “unglamorous, unloved part of the business,” and the “corporate equivalent of being sent to Siberia.”
Ouch.
It’s hard not to wince when reading something like this, but the writers do make an excellent point: procurement is a deeply misunderstood corporate capability.
There are several reasons procurement continues to have a perception problem among stakeholders. The most-quoted reason lies in the past. Until comparatively recently, procurement was seen as a back-office function comprised of people with little or no influence who simply reacted to “buy” signals from the business. Despite significant transformation, this perception is proving hard to shake off.
But that’s not the only reason. Consider the fact that for many stakeholders, their only interaction with procurement has been a negative experience when their proposal was blocked. Other stakeholders have been frustrated by procurement’s over-focus on cost or have little knowledge (or interest) in what the job actually involves.
Clearly, procurement still has a perception problem. Below, we explore some of the ways that we – as a profession and as individuals – can help change the face of procurement.
Realistically, cost savings will always be in the top three priorities for procurement. But focusing on cost at the expense of everything else damages supplier relationships, stakeholder perceptions, and long-term value generation. There are plenty of additional ways for procurement to add value, including:
Sometimes, procurement just has to say “no” to a purchase request. But communication is important. Rather than simply firing off a refusal without any context, take the stakeholder through the journey to help them understand why, and work together to find a better solution.
For example, you could educate a stakeholder on why Total Cost of Ownership (TCO) matters, or explain the need to balance cost vs risk, or show them how their purchase could be an opportunity to engage with diverse suppliers. Properly handled, this could be an opportunity to turn a disgruntled stakeholder into one of procurement’s top supporters.
Traditional pathways to the CEO role usually come from functional leadership positions: the CFO, CMO, CTO, or COO. But there are also plenty of former CPOs in the top job, including Apple’s Tim Cook and GM’s Mary Barra.
As company success increasingly hinges on the strength (or weakness) of the supply chain, we can expect to see more CEOs drawn from the ranks of procurement and supply experts who understand the supplier landscape and know how to turn it to their organization’s competitive advantage.
Automation of the day-to-day, tactical parts of the role has the potential to free up procurement professionals to become something new: change agents and troubleshooters. The key lies in being proactive – approaching the heads of other functions, taking the time to understand their priorities and challenges, then showing how procurement can help. Working strategically, procurement can help the business tackle its biggest challenges including boosting sustainability, increasing diversity, and eliminating modern slavery.
It’s easy to forget that a lot of people simply have no idea what procurement involves. It’s not easy to explain in under 20 seconds what we do, but it’s important to have an impactful “elevator speech” that explains procurement and the value can we generate beyond cost savings. A great approach is to make it relatable to your audience. Our senior sourcing advisor Cindy Rittel wrote a great article on this very topic where she explained procurement using a Christmas Turkey.
If you spend any time on sites such as LinkedIn and other platforms, you’ll see that there’s a great sense of community among the profession. Procurement professionals are highly engaged, excited about the impact they can create, and full of fantastic ideas. The challenge is to find ways to broadcast this positivity beyond the functional bubble and get other functions and stakeholders as excited about procurement as we are!
Need help expanding your procurement function's focus beyond cost savings? Utilizing a group purchasing organization is a great way to save money, time, and effort, freeing up procurement to concentrate on other strategic initiatives. Contact us to learn more.
