What Do Procurement and Saturday Night Live Have in Common? Cheeseburgers, Of Course Andrew Karpie - November 20, 2015 6:35 AM | Categories: Cost Management, Friday Rant, Procurement Commentary | Tags: Incendiary Tidbits, L2 Do you consider your procurement organization to be customer-centric? Are you really concerned about it? The Hackett Group’s report, “The world-class performance advantage: How procurement organizations are reinventing the stakeholder experience,” enumerates some very compelling reasons why you should be. But what about your customers? What do they think? Are they satisfied? Or while you are efficiently and relentlessly pursuing your business mission — reduce costs and risk to drive fiscal year profitability — do they think you are more like the Olympia Restaurant? How CLM can help supply chain risk management: The Intersection of Contract “Invisibility” and Risk Management: Be Afraid (Be Very Afraid) C’mon, C’mon! Some of you may have, at some point, seen or heard of the 1978 Saturday Night Live skit, “The Olympia Restaurant: Cheeseburgers, Chips and Pepsis.” If you haven’t or would like to see the skit again — and are willing to languish through a 30 second commercial — feel free to check it out here. Or if you prefer not, just continue reading. At the Olympia Restaurant, customers can ask John Belushi for whatever they want, and they can get it so long as it is either cheeseburger, chips or Pepsi. “Cheeseburger, cheeseburger, cheeseburger,” is the refrain. The customers almost all eventually conform to what is being supplied, reluctantly abandoning any hope of getting what they actually want. In the meantime, the cheeseburger machine continues cranking efficiently and probably profitably. The problem is the customers are unhappy and unsatisfied, and it won’t be long before they scorn and disregard the Olympia establishment and find alternative ways to get what they need. Cheeseburgers? The topic of customer-centric procurement is not an unfamiliar one within the procurement community. But what do you make of it? Does it seem too conceptual or fluffy to be really important? Or are you just too busy getting done what absolutely needs to get done? A recent guest article on Spend Matters UK/Europe, well worth reading, noted: “It is increasingly important for procurement to be involved in delivering what the customer wants and what an organization needs from its suppliers to deliver it … However, in discussions with procurement professionals we heard that despite the obvious need for customer interaction, many are pushed to focus more on their suppliers rather than their customers. Even in supply-chain planning with all the demand-driven hype, it’s not always easy to include input from customers.” However, the article continues: “And yet, because customer interaction seems costly and time-consuming, for many businesses it seems to feel that the cost of this engagement can outweigh the benefits. [But] as the pressure to be more profitable grows, businesses won’t be able to afford the excess inventory, lost sales and missed innovation opportunities caused by inadequate customer collaboration.” It is asserted that there are real benefits associated with taking the time to pursue a customer-centric approach. But don’t just take it from us at Spend Matters. As noted above, The Hackett Group’s May 2015 report provides a fairly exhaustive discussion of why customer-centric procurement is important and steps to take to move in that direction. Here’s a Whopper: The report states that world-class organizations that spend more time aligning with internal stakeholders generate 41% higher savings than organizations that spend little time — not exactly conceptual or fluffy. According to the report, 83% of these top organizations deploy liaisons between procurement and the business, compared with 44% of other peers. While most procurement functions segment suppliers, these top performers consider segmenting internal customers to be just as important. The bottom line here is that customer centricity drives hard savings, and top performing organizations are pursuing the approach. It should not be dismissed or ignored. Is it an Alka-Seltzer Moment? To sum up, we live in a world of mind-numbing, stomach-rumbling change that requires enterprises to become dynamic networks of resources and capabilities. In that world, procurement becoming a high performing capability that is dynamically integrating supply and demand is critical. That means embracing and allocating time and resources to the demand side of the equation, not just the supply side. In fact, it might be best to drop the temptation to think abstractly and analytically in terms of supply and demand functions, demand forecasting and the like, and just start figuring out how to concretely interact and communicate with internal customers — then build from there. If you are partying with John Belushi like it’s 1978 at the Olympia Restaurant, then you better look around and look for your customers. The menu has changed. From our sister site Spend Matters UK/Europe comes this related research on the contingent workforce: Total Talent Management and the Contingent Workforce Paradox. Please follow Andrew Karpie on Twitter @andrewkarpie Related ArticlesForget Category Management, Start with Customer Management and Context Management: Part 2 – The SolutionHow Has a Supplier's Cost Structure Changed Over the Past Decade?Spurious Correlations, 150% Cost Savings and How to Justify Your Next Procurement ProjectHow to Keep Salesforce.com Costs in CheckCan an Utility work for Know Your Customer (KYC) Requirements? Discuss this: Cancel reply Your email address will not be published. Required fields are marked *Comment Name * Email * Website Notify me of follow-up comments by email. Notify me of new posts by email.