Procurement Transformation: From Operational To Strategic
Once upon a time, procurement was seen as a nice to have but by no means a business critical function. That was until leaders tapped into the true cost-saving potential of a well-utilised procurement team.
As such, over the past few years, procurement has moved from being a siloed area of business, to a necessity that more than deserves its seat at the big table.
That being said, not every organisation has come to this realisation yet. If yours is among them, you may have found that you’re struggling to move to a more strategic way of working as the rest of the business still sees you as a strictly operational function. However, according to our host for this month’s webinar, this is about to change and now is your time to shine.
Bradley Wilkie, has come up against that struggle time and time again during his 17 years in the procurement space. Bradley’s reputation for being a disruptor in procurement has seen him garner success as an independent procurement consultant, looking at the bigger picture rather than one vertical.
Having spent the majority of that time working in the IT reseller world, Bradley picked up on a few common issues that procurement teams often run into which can hamper their success and integration with the rest of the business. We’re sure some of these will sound familiar.
Something that Bradley stands by is that procurement isn’t just one thing. It can be consultative and even creative when given the room to grow. During the session, he shared his most valuable pieces of advice on how to achieve procurement utopia in your organisation.
Procurement is bigger than price
If you stand a chance at getting your organisation to view procurement in a more strategic light, it’s imperative that you champion looking at how other business functions interact with the procurement ecosystem.
Bradley implores procurement leaders to connect with their vision for the business and their department, because without a robust ‘why’ behind what you’re doing – your plans become flimsier than they ought to be.
Not only is your ‘why’ crucial to being the driving force behind procurement, but it’s also going to be what props up your change management strategy, aligns your other business functions and ultimately keeps you all on track towards the same goal.
During Bradley’s time working with big IT resellers in procurement, he saw the shift from the department being seen as an administrative function to being a core part of the business strategy – but it wasn’t always easy getting there.
Unfortunately many businesses remain quite single focused on acquisition, but they don’t see how having a buying strategy running alongside that can be beneficial to their bottom line. Procurement experts should sell this as maximising the effectiveness of buying to boost profitability and gain cut through with the more sales-driven personalities in the business.
Staying on the same page
The reseller space in particular is quite reactive in terms of procurement, where they could really benefit from becoming more proactive. Part of the reason for that is that it’s a very sales-oriented environment, where distribution deals are being made often without procurement’s knowledge, as it’s mistakenly seen as part of sales activity. Additionally, the sales team often have a closer relationship with end users and distributors which can make it difficult to be heard in procurement.
This can be pretty demotivating as your procurement department not only feels cut out of the equation, but also can end up having to untangle a mess when distribution activity isn’t in line with their strategy.
If this sounds all too familiar, Bradley stresses that one of the golden rules for a sales culture that wants to retain and maximise its procurement team, is to make it clear to everybody in the business that procurement is in charge of tenders and that locking in deals without consulting them isn’t okay.
Once a deal has been closed, procurement’s hands are then tied and they will feel forced to go along with spend that wasn’t in line with what they wanted for the business. Not being afraid to ask for that support from higher-ups is key to stopping this sort of misunderstanding in its tracks.
Once again, this comes back to your entire business being aligned to your ‘why’. When everyone is on the same page in terms of business objectives, rather than being driven solely by personal KPIs, then these awkward situations just don’t arise.
Investing in your team
Bradley highlights the distinction between finance and procurement, and that people will often hire in the wrong skillset for a procurement role. This could be why many organisations end up with a very operational procurement department, because the people they have on board are more aligned with a finance goal than a procurement goal.
Something that he will often recommend during his consultancy work, is that business leaders should take a moment to reflect on the people they have in their procurement department, and if they need to look at hiring or utilising external help.
It’s not easy making the switch from being viewed as strictly operational to strategic, especially when your own team doesn’t see it that way. You may well have people working with you who are incredibly capable, but due to an unchallenging culture have never been utilised to bring out their best traits.
In order to build a true procurement culture in your business, you need to make the case for the financial returns on new hires far outweighing the outlay on salaries. Just because an individual’s goal is to save on costs, doesn’t equate to them or their skills being cheap. Not only are highly trained and experienced procurement specialists entirely focused on keeping that bottom line in check, but they’re also more likely to drive a self-evolving, strategic, inquisitive team culture that will make a greater impact overall.
The Covid opportunity
The pandemic has been a trying time for most, but every cloud has a silver lining and in this case, it’s that there’s a real opportunity for businesses to utilise the disruption that’s been caused to implement change.
Not least because the rest of the business may be quiet enough to hear you out, the best time to introduce change and re-evaluate your organisation’s ‘why’ is when we’re already in a period of uncertainty.
Not only will you empower the procurement function to take a different direction and pick up pace, but you’ll also strengthen the company’s morale by utilising this time to highlight the benefits of a well utilised procurement function.
This time can be used really wisely to showcase the importance of procurement as a crucial lifeline for the organisation when times get tough – who doesn’t want to save money during a crisis?
Ultimately, in order to not be siloed to an administrative role, procurement leaders need to not be afraid to speak up on issues pertaining to the wider business too. So if you were thinking of waiting for the pandemic to blow over before grabbing the reigns, don’t delay. After all, has there ever been a better time to flex your strategic skillset and show your value than now?
There was a lot to digest from Bradley’s session, and we certainly learned a lot about the struggles procurement teams so often come up against and how to combat them. If you’d like to speak to Bradley about how your procurement operation could benefit from a review or consultation, please get in touch with meand I’d be happy to set up a call.