Spend Matters welcomes a guest post from Sanyam Khurana of GEP.
One of the key metrics of any procurement department and business users is savings. However, a better metric would be how the money was saved. Achieving results requires more than sourcing from the right vendors, and procurement teams can add great value by collaborating better with the business stakeholders and maintaining their worth at the table.
Over the course of last two decades, purchasing departments evolved from silos buying direct material to a strategic sourcing group with an objective of benefitting the bottom line. Business needs evolved as organizations matured – leading to new “wants” and “desires.” However, the perception of procurement’s role among business stakeholders still reflects that of a prescriptive and transactional role of using the spend data to source material and services and drive savings. However, with technology coming into play, these transactional steps are increasingly system-driven, leaving the wrong impression with business stakeholders about procurement team’s worth at the table.
Procurement teams need to evolve beyond sourcing and savings and should continue evolving their role to that of a “strategic, analytical, informative” contributor to the day to day working of the category. Here are few recommendations on how procurement can collaborate at the table with their business stakeholders:
Adding value beyond just savings: The first and most important quick win is truly understanding the scope of work. Following this by mapping a behavioral pattern of purchasing, if it exists, helps identify the challenges a buyer can face. Supplementing it with market and industry knowledge, quantifiable benchmarks, and best practices can help change the tactical viewpoint many procurement buyers face from the business. Interestingly enough, such qualitative value adds much desired credibility in the eyes of CXO level leaders and a feather to procurement’s hat.
Simplify the process: One of the shortcomings that usually causes discontent with business folks in large organizations is the cumbersome procurement processes or the lack of knowledge thereof. Compliance to processes is important, however, and it is imperative for buyers not to let process wither the success of a project. Buyers need to analyze the deal and processes diligently to craft a solution for a successful on-time project completion, benefitting the business goals.
Play the advisor and analyst: Strategic viewpoint in sourcing and procurement encompasses two sides – external and internal. Buyers can play the analyst by analyzing supplier competitive landscape, market pricing indexes, etc. On the internal side, they are the advisors, consuming the information and providing valuable analysis to the business. This helps create value at the table with business folks, helping them make an informed choice on their selection of suppliers.
There are definitely many other ways through which procurement can be business’s new best friend through a new avatar of “analysts, practitioners, advisers” to build credibility over with the business. However, changing perspective is an effort driven process that starts from within. There is more to procurement than what is projected or painted out to be, and to bring a change in this perception, one needs to be the change one wants to see.
For more interesting thinking on procurement, visit the GEP Knowledge Bank.