Got Vision? — Taking Procurement to the Next Level

Spend Matters is pleased to present a guest post by contributor Jason Magidson.

Over a series of posts, I'm going to discuss some of the best practices I'm seeing, inside or outside of procurement, which I believe can help procurement organizations move to the next level.

I've been talking with a number of procurement leaders and managers who are saying they have used category management and sourcing technology to get to a certain point but feel they have plateaued. They are saying they want new ways to take their spend categories to the next level.

I recently spent two days at a company called Zingerman's, which Inc. Magazine called "The Coolest Small Company in America." This is one of the best run companies I've ever seen. Employees love working there and the culture supports collaboration to drive the bottom line. I believe that what I saw at Zingerman's can be employed by procurement organizations to take things to the next level.

In this post, I'll focus on how procurement managers can utilize the Zingerman's visioning approach. Zingerman's is a food business that consists of a deli, a candy manufactory, a bakery, a creamery, a coffee company, a restaurant, a mail order business, and a training company. The key difference about how Zingerman's uses visioning is that their visions are alive at ALL levels of the organization. They create visions not only for their group and individual businesses, but also for team projects and initiatives, and they are all kept front and center. Everything truly revolves around them.

Visions are not mission statements (i.e., why the company exists, or the impact they want to have on the environment and itself) but, rather, statements of what a team is passionate about seeing happen at specific points in the future. Visions generate energy and enthusiasm. Procurement managers at any level can do the same thing in their realm of influence; whether they manage an organization, spend category, process, or project.

To make the approach more concrete, here's an example of a vision for a spend category team collaborating with suppliers to drive value:

  • It is May 1st, 2013 and our category team is about to head out for the evening. We're feeling great because the President of the division we serve recognized us in today's town hall meeting. Great things are going on that make it clear that our long-term vision for collaborating with suppliers is now the reality that we planned back when we wrote our vision.
  • Our category team works with our suppliers to go through a systematic process that reduces total cost of ownership and empowers employees to focus on their work so they can have a bigger impact. We start with sessions where Procurement and suppliers observe regular employees giving us their blue-sky wishes on what they want from our spend category. Next, we develop our joint vision of how we want to serve the company. Our procurement category team then works with suppliers to identify the ideas we can pursue that will make immediate improvements, moderate-term ones and longer-term ones.
  • By working proactively together, we are saving our company and the supplier so much money. We're also supplying better Product Development technology and shorter response time for new products. When Sales speaks with customers they emphasize our lower prices and faster response time.
  • Suppliers are strongly encouraged to submit unsolicited ideas to the company. The organization is committed to responding to these ideas within 45 days about the intention to further explore or pursue specific ones. Procurement works closely with other functions in the organization to develop responses.
  • Collaborative innovation with suppliers is measured, and employees are rewarded for it. These rewards take a variety of forms; sometimes they are financial but many times they consist of appreciations, opportunities, and recognition. Our CPO hosts an annual "best supplier collaborations" luncheon. C-level executives present awards to suppliers and category teams. These awards are publicized in newspaper spreads.
  • Our category managers are eager to get to work in the morning because they are proud of the impact they are making. They feel valued and appreciated by their internal clients.

I could continue painting the vision but I think you get the idea. Having a vision creates important changes within your organization. It captures the hearts and minds of procurement professionals, employees, and suppliers. It raises the energy level. It supports a flow of financial benefits. It builds Procurement's reputation in the organization. So go ahead and try it ...

- Jason Magidson

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