Moving from Transactional to Strategic: It Starts with Listening

Spend Matters welcomes this guest post from Andrea Brody, senior vice president of global marketing at BravoSolution.

Long seen by peers as the “office of no” — as in, “No, you can’t buy that,” or, “No, that supplier is not on the approved vendor list” — procurement executives have struggled mightily to change how they are viewed and valued. As their organizations shake off the chains of the recession and look to reposition how to achieve sustained growth and long-term value, a new day dawns for procurement. The opportunity to move from being seen solely as a source of cost-cutting to one that enables the overall strategic mission of the organization has long been on the wishlist, and now is the time to seize the moment.

The first step is to engage key influencers within the organization in a conversation about their goals and expectations of procurement. While fraught with the possibility of making you schizophrenic after you’ve listened to your colleagues’ divergent needs and expectations, this is critical. Your CFO will say that your only mission is to cut costs. Corporate social responsibility expects your sourcing strategy to support goals of green procurement, diverse suppliers and more; the chief supply chain officers expect procurement will drive suppliers to 100% on-time delivery and zero excess inventory. And, of course, the CEO expects it all. Before you panic wondering how you can possibly meet all of these needs, take a deep breath. Your job at this point is not to promise to deliver on all those expectations but to listen and learn how all these goals fit into the overall vision and strategy for the company.

Armed with this information, the next step is to align your procurement strategies with the priorities that will best support the company’s goals. Understanding your supply base and the mechanisms you can apply to manage those relationships for the good of your organization allows you to create a new framework for the conversations.

A Holistic Approach Cements Procurement’s Strategic Value

Just as you move from being an order taker to approaching the acquisition of goods and services with a long-term view, so does your process. A holistic approach brings the key areas of strategic sourcing together: spend analysis, e-sourcing, contract management and supplier relationship management give your team an immediate pathway to generating more value, reducing risk and influencing innovation. It also engenders collaboration with both suppliers and internal cross-functional stakeholders to inform decisions based on value to the overall business objective.

You, at the Heart of How

No longer in transaction mode, you’ll be able to present options, address trade-offs and demonstrate how the entire procurement process propels business growth and maximize competitive advantage. You will, of course, continue to drive savings, and at the same time, turn supplier lifetime value into an asset for much, much more.

The resulting shift positions you and your team as the engine of “how” and a catalyst for growth. With this, your colleagues and the larger organization can achieve what needs to be done, what is aspired to and what matters most. Which you should have been all along, right?

First Voice

  1. Ted Linklater:

    Excellent article. One of the few articles that points out that Procurement is still considered to be a clerical function or at best, as indicated by the “No…” comment above, that Procurement is NOT a good team player with the other internal stakeholders

    Among many issues that are problematic, (in my opinion), is that outside of perhaps the CFO, very few departments fully understand the bottom line significance of procurement, in terms of dollars.

    Additionally other departments have metrics that are in conflict with those metrics of procurement. Naturally of course, the metrics of other internal stakeholders are “much more important than those metrics of Procurement”. Perhaps this belief is related to the perception that revenue growth is the most strategic metric within an organization and that everything else is subservient to revenue growth.

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