The procurement function has come on in leaps and bounds in the past few years, but still suffers from a lack of understanding about its role.
Ask anyone who knows little of procurement what they think the function does and “cut costs” is likely to feature prominently in the response. This is disappointing given the function’s strategic importance, but indicative of how procurement is perceived.
Speaking last year’s CIPS Annual Conference, Rita Clifton, past president of the Market Research Society and former chair of Interbrand, pointed out that a Google image search for procurement was not likely to make anyone want to join the profession. I decided to try it myself and was greeted with endless images of animated figures carrying coins and spend analysis charts. Nowhere did I see images of dynamic supply chains, or anything that looked remotely strategic.
These images are what external stakeholders, CEOs and graduates see when they think of procurement. The blame for this rests with the members of the profession themselves and the traditional skillset associated with procurement. For too long the function has focussed on cost to the detriment of more strategic objectives. Whether this is true in practice or in terms of how the function presents itself internally, the approach does little to earn recognition.
The value a proactive procurement team can add to an organisation is immense and can range from effective risk management all the way to the development of new revenue streams. This type of project needs to be highlighted alongside savings.
At 4C Associates we are well aware of the need to publicise success and look for procurement consultants who have strong spend analysis skills and are good with numbers, but also able to take a holistic view of their contributions to the business. This includes recognising the value in building relationships with suppliers, investing in innovation and transplanting lessons learnt in one area to another.
Relationship management is a crucial element of any procurement function’s success, but this is not only true with regards to suppliers. By building relationships with internal stakeholders, procurement can not only raise its profile, but also increase its efficiency and remit. Support from key stakeholders will facilitate the process of making all spend go through procurement, opening up many opportunities to deliver value. Procurement cannot underestimate the value of soft skills in this process.
Although the past few years have been kind to procurement and seen the function’s profile rise in part due to financial necessity, it must now fight to remain at the decision-making table. That means having the confidence to make difficult decisions, which will pay off for the business in the long term. There is no room for a short term mentality in the boardroom of a sustainable business. Procurement needs to spearhead bold and strategic choices, which can lead to increased capability and significant cost reductions.
Of course it is no good doing all of the above if you don’t shout about your success. It is vital to ensure procurement has a voice alongside the more traditional business departments such as marketing and finance. No one is going to publicise your wins for you, so make sure you do so whenever you get the chance, both internally and externally.
☛ Milan Panchmatia is a director at 4C Associates