So, we’re in a collaborative mode and want to lead co-buying. Our bosses want savings. Everyone wants success stories, awards and publicity. Shall we start?
In reality, when it comes to procurement teams from different companies having been told to work together, they would have more or less a standard set of arguments:
“We do better.” Of course, why would you accept that the other guys could possibly be more efficient in anything.
“They got different processes.” Everything they do is complicated and will slow us down.
“We don’t have time for that.” This is not in my job description; I’m already overworked and underpaid, so why would I take this on?
“They only mind their own interest.” We’re custodians of our company best interest, as much as they are, so everyone will want to take advantage.
To crack this ice, it is suggested to remember that procurement alliances are no different to other ones, and they all follow same key concepts.
In the post-formation stage, alliances need to be managed through coordination, trust and relationship, and conflict resolution. Some practical suggestions to implement that would be:
1. Business integration first, then procurement integration
The critical misconception is that procurement can manage it all, just by bundling volumes and harvesting benefits. In my opinion, Business comes first to synergize. Procurement knows how to monetize synergies, but not before Business people agree on specifications, branding, customer experience etc. Otherwise, procurement needs to have a bullet-proof mandate to align on the cheapest option within the alliance.
2. Joint vision and strategy
Procurement collaboration needs to be articulated by Executives, and reflected in the vision and strategy of the alliance. Loosely coordinated vocational initiative simply won’t work.
3. Shared KPIs
When we operationalize the joint strategy, we need to define a small set of KPIs (savings, efficiencies etc.) that will be reported to everyone’ management and embedded into individual performance metrics of all stakeholders.
4. Operational efficiencies through collaboration
Collaboration should ease lives. Joint tendering saves time and effort, as opposed to a multitude of individual tenders. Collaborative procurement strategy shapes up local category strategies. Effective operational model makes best people in the alliance working for the benefit of everyone.
5. Standardised processes and templates
You will have to standardize some processes, metrics and documents – as simple as KPI definition, or as complex as category trees. Joint tenders needs to be recognized by individual governance bodies, so your Tender Committee would want to review a standard familiar evaluation. Once alliance members approach the same preferred supplier with their contracts, these would better be standardized.
You would need to communicate a lot, so establish community channels (e.g. Microsoft Teams, SharePoint, project collaboration tools etc.). Even daily communication needs to be organized differently; otherwise emails from myriads stakeholders across the alliance would swamp you quick.
Communicate extensively, create awareness, achieve gradual adoption, and then convert adopters into change champions. Remember, if you want to be successful, you’ll have to manage the change.
7. Open doors approach
Don’t shut your doors to those, who didn’t want to participate initially. Let them know there’s always a chance to join. They will watch, and sooner or later decide to catch up, as soon as they find it useful.
☛ Sergii Dovgalenko is head of procurement – corporate services procurement & supply management at Etihad Airways.