Why Is Procurement Obsessed With Being a “Partner” to the Organisation?

We are pleased to bring you this guest post from Romy Hughes, Director at Brightman Business Solutions.

A common trend within large organisations today is for procurement (and other functions) to describe themselves as “partners” to the organisation, rather than “suppliers.” There is a certain logic to this approach – but there is nothing wrong with being an internal ‘supplier.’

The perceived wisdom is that if people see themselves as part of a bigger whole – i.e. as a partner contributing to something greater – they will be happier, more motivated, and thus more productive. But in most cases, the word “partner” is nothing more than a buzzword that’s thrown around by senior management. It makes those at the top feel good about democratising the company, but bears little resemblance to reality. This obsession with a single word drives many people within the organisation to adopt the wrong attitudes and behaviours. Rather than elevating someone to a higher purpose, it inadvertently devalues a person’s role. No one wants to describe themselves as a supplier anymore because it is seen as demeaning. But what is wrong with being a supplier?

The case for partners

The exact origin of this “partner obsession” is tricky to pinpoint, but it can be associated with the prevailing trend for flatter corporate cultures. Hierarchies are bad. Flat is good. After all, no one likes having a boss to report to, so let’s all be partners instead!

In some organisations this partnership approach is advantageous. The near 400,000 people who worked on the Apollo programme for example all shared in the common mission to put man on the moon. Nowhere is this more plainly demonstrated by the janitor, who, when asked by the visiting JFK about his role at NASA, simply replied “I’m helping to put a man on the moon.” Being a partner is perfectly plausible when your collective goal can be summarised so succinctly. Unfortunately, the “goal” in most organisations is not so easy to define.

What’s in a word?

The unintended consequence of this obsession with partnerships is that the word “supplier” has slowly become a dirty word. This is not helpful to anyone. The supplier/customer relationship is the correct way for all internal departments to operate for a number of reasons. This is not unique to procurement:

  • It encourages the right attitude: A customer-centric business survives and thrives because it is focused on improving the service it offers. It drives an attitude of self-improvement. It is hard to encourage the right attitude if you don’t routinely look at the needs of your customers. Procurement for example has multiple customers within the organisation, but ultimately it has one customer – the organisation itself. If it remains focused on the needs of the organisation as a whole, and not its own short-term goals, it will deliver a better service.
  • You will measure the right things, which will encourage the right behaviours. The language you use drives your behaviour. If you use the wrong language to describe your role (i.e. partner), you will use the wrong KPIs to measure your success. This in turn will encourage you to pursue the wrong behaviour. For example, many procurement departments still value cost-cutting over everything else. Their primary KPI is the amount of money they can shed from the bottom line. At face value this seems sensible; saving the organisation money is a good thing, right? Not necessarily. Value is a far more important metric. For example, if the by-product of cutting a particular supplier negatively impacts the organisation’s ability to deliver value to its own customers, then that is clearly the wrong thing to do. Cutting the printer budget looks great on the bottom line, but if it means the business can’t print anything it hasn’t helped anyone. Procurement should therefore focus on the value of the services it purchases, not the cost.
  • You ask the right questions. In the traditional supplier/customer relationship, suppliers routinely ask their customers for feedback. All of the most successful companies have developed ways to measure and analyse customer feedback. If you don’t ask your customers what they want, how can you know you are delivering anything of value?
  • It secures your future. Building on the above point, if you don’t see yourself as a supplier that needs to deliver value in order to retain your customers, you run the risk of having no value to the organisation and being shut down. While an organisation is unlikely to shut down its own procurement department, it can certainly restructure it. Even partners aren’t safe from a restructuring exercise.

Ultimately, everything we do in life is a service to someone else. We are all suppliers. It is worth remembering that partners and suppliers are not mutually exclusive either. You can still be a partner in the organisation and a supplier. If you embrace this mindset and focus on measuring and delivering value to the organisation, the quality of service you deliver will improve dramatically and you will be more effective than you ever have been.

 

Disclaimer: The opinions expressed in this article are those of the author and not necessarily those of Spend Matters.

Voices (2)

  1. MA:

    Procurement right now is suffering a real identity crisis. There’s too much stripping out the simplicity in what a Procurement Service should be. It’s like Elton John’s wardrobe. One day Procurement wants to dress like the Yankees and the next day it will want to dress as Donald Duck!

    I agree with the part in the article about language being key. That only goes so far because 1) The Procurement Service has no clear levels of accountability and 2) The role of the Procurement Service doesn’t fit with the organisation’s culture. 3) The structure of the organisation does not allow for more effective Procurement.

    A lot of organisations I have served is whereby the Procurement Service does not own the majority of the outcomes it seeks to achieve deriving from the activities they undertake meant the view the organisations took were that Procurement was ‘hands off’ Service. Because of that lack of ownership and even accountability, Procurement will adopt that partnering mindset. Yes we will establish the contracts for the organisation, but it’s then over to the wider organisation to manage and own those contracts. The culture of the organisation will then drive such behaviours based on those factors because the wider organisation functions are seen as partners. Seen that with HR, Legal and even Finance departments which is then driven by organisation structure.

    Procurement functions I have served come undone when trying to use blunt force to hammer a round peg into a square hole. Most cases the procurement capability far outstrips that of the organisational capability which sees most the value add drained or worse not realised. One could argue Procurement could light the touch paper that drives change and improves capability, others would argue should that role lie with Procurement?

    Procurement absolutely I agree should be primarily focused on value add. However, to really achieve that, it needs to first know it’s identity. Often more than not it will go through the Emperor’s New Clothes routine before it really understands it’s role within the organisation. By that time the organisation itself might not understand what their Procurement Service is and should be.

    1. Romy Hughes:

      The challenge of identity is a real one for procurement. It needs to define the service it provides to the organisation and educate its “customers” on how best to make use of this service. It is the responsibility of procurement, not anyone else, to ensure the organisation understands its role.

      Too often we have seen procurement departments become frustrated with the wider organisation because they spend a lot of their time resolving errors. They don’t see that the interaction between procurement and the wider organisation (and thus reducing errors) is their responsibility. In a customer/supplier relationship, customer service would be the focus!

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