Spend Matters welcomes a guest post from Diptarup Chakraborti, Assistant Vice President of Marketing at Zycus.
When a movie is a box-office success and sets the cash register ringing, the people behind the making of the movie are elated. Likewise, when savings generated by procurement is recognized by an organization’s top management, the chief procurement officer can’t stop smiling. But that’s the end result. What goes on behind the celluloid and behind the procurement numbers is a completely different picture. Remember the movie about Alfred Hitchcock? With this article I want to rewind the movie “Hitchcock” and show you what goes on behind the scenes and why procurement can connect with movie making.
Calling the shots
Hitchcock was a director with a vision and an artistic daring that set him apart from his contemporary filmmakers. In the same way, the Chief Procurement Officer (CPO) of an organization is responsible for heading and driving the procurement function and achieving the executive goals of managing cost, protecting margins, and developing strong relationships with other functional groups. Some of the major obstacles faced by the CPOs are a lack of capital investment, inadequate support from the legal and finance departments, insufficiency of skilled resources, and many more.
Setting the camera angles
Technology has always proved to be a boon, be it for making movies or analyzing procurement data. The important factors are to know and understand its application and the ability to utilize it well.
“Psycho” was shot with 50 mm lenses on 35 mm cameras. This camera trick mimicked human vision, and thus enthralled the audience. The most notable scene of the movie, the shower scene, was shot using 77 different camera angles, an unconventional feat for the time.
The procurement landscape today is inundated with cutting-edge technology to manage the end-to-end procurement process, i.e. from source-to-pay. The CPO needs to identify the correct camera type and the angle at which it should be used to make it more strategic and less tactical.
Music composer, editor, writer – choosing the perfect team
Hitchcock had the vision, but he needed his supporters – his wife, the team members, actors, agent, assistant, music composer, writer and many others to turn his vision into reality. The CPO also needs to have his perfect team in place. He has to ensure he has the job role-to-talent equation set correctly. Only when he has the right people can they use the procurement technology well enough to achieve the job and organizational goals.
Let’s shoot - here, there, where?
Hitchcock’s “Psycho” was shot at one location, the Revue Studios, the same location as his television show. To minimize costs, Hitchcock filmed the movie in black and white. “Where should we source from?” is a question that continues to be a major obstacle for the CPO. Should he continue off-shoring or consider re-shoring? According to a Gartner study, 30 percent of US-based companies are in the process of either re-shoring or near-shoring, the primary reason being supply chain agility and responsiveness.
Casting the right actors
There may be many “IT Suppliers” to source from—be it a supplier in a developing country with mass production facilities and low labor wages or an incumbent supplier with whom your company has been carrying out business for a long time. But the point procurement really needs to consider is this: Should we source from that one supplier just because the wages are low, or continue business with the incumbent supplier, who lacks innovation, just because we have been doing business with them for a long time?
Is the screenplay correct?
The screenplay or the script can be likened to the procurement contract. Procurement and suppliers have to adhere to it. Contracts provide a framework within which the project is executed; it gives a sense of direction and serves as encyclopedia procurement can refer to when in doubt. Thus it’s necessary for procurement to have well defined contracts.
Getting the Producer and Distributor Onboard
The director has the vision, but if he is unable to get a producer and distributor on board, the story will die with him in all probability. Procurement may find itself in a similar quandary quite often. The chief procurement officer may understand that it’s necessary to invest in superior procurement technology for better functioning, but convincing the board to invest in such technology is a completely different and difficult task. Yet, it is something that has to be done.
Moving ahead, the CPO has convinced the producer, i.e. the board, to make the investment in procurement technology and the solution has been implemented. The next big challenge for him is to distribute his solutions, in other words to find Internal solution champions who will adopt the solution and promote it to the larger user base.
Fighting the censor board
Hitchcock had an ongoing battle with the censor board to get their approval of scenes never done before in American cinema, and at times he had to compromise. Procurement has to fight battles with its own censor board. Any guesses who that is? Yes, it is the legal team.
Procurement has to collaborate with the legal team while formulating the contracts. And more often than not the collaboration is not a happy one. To ensure compliance with company and legal policies, legal teams often ask for modifications in the contract terms and conditions. This can be quite discouraging and can almost break the procurement executive if they have committed to certain terms to the supplier, like advance payment, percentage of discount, longer credit period, etc., which can no longer be met as per the legal team’s mandate.
The producers, distributors, and censor board all were cynical about the movie’s success. Yet, the movie attained unparalleled success. It earned $32,000,000, far beyond its budget of $806,947. Oftentimes procurement must make unconventional choices to get the blockbuster hit, i.e. higher savings. This could include changing the incumbent supplier or sourcing from the same country instead of the low manufacturing cost country. It’s only when procurement can challenge the norm that the next break-through can be achieved.
And the award goes to…
Hitchcock’s efforts in directing and financing “Psycho” paid off, as the movie made huge profits and won many laurels, like the Golden Globe Award for Best Supporting Actress – Motion Picture, and the Edgar Award for Best Motion Picture Screenplay.
Recognition and awards always act as a motivator to perform better. How is your company recognizing procurement’s contribution to the organizational goals? Are there monetary rewards? Or is management working towards elevating the team to a strategic position?
Hitchcock had a tumultuous time while directing the cult movie “Psycho." From fighting for a distributor and a producer to approvals from censor boards to selecting the right actors, it was a difficult journey that eventually paid off very well. The CPO has to fight similar battles in procurement. He has to make decisions that may not please everyone and choose a path never taken before. But, sooner or later, a great vision can be trusted to turn into a blockbuster hit with the organization.