Covid-19 has demonstrated the value procurement brings to businesses.
Covid-19 has demonstrated the value procurement brings to businesses.

How to make procurement indispensable

30 September 2020

Making the procurement function famous means focusing on your unique strengths, and understanding others. 

While the events of the coronavirus pandemic have produced relatively few good news stories in general, when it comes to tales of procurement professionals going above and beyond the bounty has been plentiful, from the sourcing of PPE for medical teams and the repackaging of catering goods such as sacks of flour for domestic use, to the glut of restaurant-quality foods at risk of rotting due to the cancellation of summer events.

Even strawberries have got in on the action. More than two million of the fruit are supplied to the Wimbledon tennis championships each year, along with 7,000 litres of fresh cream. With the event cancelled, procurement teams had to urgently redirect 23,000kg of the crop, which stays on the plants until it is picked on the morning of delivery. 

Complex globalised supply chains, and a keen focus on social, ethical and environmental issues, have made procurement a more strategic and rewarding career in recent decades. The question is how to ensure business leaders understand the value – monetary, reputational and operational – a highly professional procurement function can bring them. And that means learning to read company culture, present yourself in the correct way and seize the right opportunities.

Today’s professionals are seen not as buyers but managers of value and reducers of risk, who talk much more about benefits than they do pricing and cost, says Leigh Kopec, head of procurement and contract management at the Royal British Legion. The charity runs the Poppy Appeal campaign each year to fund services for people who have served in the armed forces and their families, as well as maintaining care homes and respite centres. Kopec has spent the past few years establishing and modernising the procurement function at the organisation, which all started with writing a business case for “proper procurement”.

“There’s really a business case for presenting to the board using case studies, examples and data. There’s a lot of research and good examples of where good procurement has mitigated risk or added value, especially in terms of social responsibility and sustainability,” he says.

Maximising procurement's influence

Procurement was already moving steadily in the right direction when the Covid-19 environment fast-tracked it and made it easier – though more imperative – to win the ear of the executive table. How can procurement professionals now maximise this hard-won influence to show what they can achieve for their organisations?

“Covid-19 has proven to be a platform for procurement teams to showcase the value they bring,” says Philip Hicks FCIPS, head of procurement at Northumbrian Water. Hicks says that in recent years, the profession has predominantly celebrated teams driving value through strategic collaborations such as supplier innovation, SRM and proactive risk analysis, whereas the reality is that Covid-19 (and to a lesser extent, Brexit) required businesses to ask very different questions of their procurement teams.

“All of a sudden, three- to five-year strategies and supplier-led innovation programmes were a luxury as the leadership team became wholly focused on real and immediate risks to the business. Reactive and agile risk assessment and pragmatic action plans were required to deal with cashflow issues in the supply chain, raw material shortages, urgent new PPE requirements and the like.”

Make sure you're heard

If businesses are to rely on procurement to achieve their goals and support the organisation, including delivering during times of peak demand, managing the impact of potential trade wars, innovation, digitalisation of supply chain, sustainability and ethical sourcing, they need to be heard and valued by CEOs.

One way of doing this, says Filip Leonard MCIPS, group head of supply chain and procurement at Maximus Healthcare, is to show the business, and the CEO personally, that you are aligned to their needs. Leonard, who was brought onboard for business transformation, began in his role remotely in April 2020, but quickly understood the need to pivot: his skills would be best used supporting and assisting the business with key tasks that were critical for its survival, talking to suppliers and the market, bringing advice and innovation.

During his induction, Leonard made a point of holding conversations with the CEO, as well as all the managing directors, financial directors and senior stakeholders in the business, to understand their priorities. He then built them into the dashboard for his procurement team, so it mirrors the numbers the business really values. Leonard also established a procurement steering group for each of the four businesses, to connect all procurement teams with the CEO’s business priorities.

“Organisational culture is really key,” he says. “I’ve worked in organisations where the doors are open to a greater or lesser degree, but it helps to mirror the objectives, as well as the language and the style of communications that you see and hear in emails, in order to create good working rapport. So we make it very clear that we’re doing X because it supports the restart of the business; we’re doing Y because it’s making us fit for growth. And that plays really well, mirroring the language and orienting what we’re doing and delivering around those key principles.”

Identifying and playing a key role in the big issues the business is facing will build visibility and credibility, allowing procurement professionals to start a relationship with their CEO, according to Hicks. “We need to create ‘real’ opportunities to interact via projects, steering groups, issue resolution.

“This will facilitate an impactful [and] meaningful interaction, and off the back of this, trusting working relationships build and develop.” However, Hicks acknowledges that building those relationships and being seen as vital to the business in the eyes of a CEO will not happen overnight. “That said, CEOs will be keen to understand how they can support procurement professionals to deliver value for their business. The key is concise, positive, honest communication,” he says.

Open up a dialogue

Of course, in reality the language of CEOs is changeable and reflects the challenges in the business at any given time. This is evident with both Covid-19 and Brexit: leaders are immediately much more comfortable in the detail of reactive plans designed to protect the business from real and unprecedented risks.

“Generally,” says Hicks, “it’s always a case of less is more. Sometimes procurement professionals look to wow CEOs with complex category and sourcing strategies. The reality is anything more than one page of key points will miss the spot. For example, a one-page heatmap showing a simple RAG [red, amber, green] across key supply categories and risks, a concise, clear ‘what, when, who’ action plan, and clarity on any residual risk is all CEOs want to see. However, I do understand that procurement is infrequently engaged directly by CEOs, so we then look to throw the kitchen sink at them to ‘demonstrate our value’.”

The straightforward approach is also favoured by Danny de Ruiter, head of procurement at UK catering company Benugo, which has faced huge challenges during the pandemic as all its outlets – high-street cafés, restaurants, dining spaces inside public buildings and in-house corporate cafes – were forced to close.

One of many issues faced by de Ruiter was a surplus of fresh soup. While this may seem a minimal asset, overnight the company went from selling £100,000 worth of soup every week to facing vats of fresh product deteriorating, leaving procurement to negotiate freezer storage capacity at short notice, along with every other hospitality firm in the same position.

It’s important that these complications are conveyed to executive teams, not only for transparency, but because if you withhold details of operational challenges, it’s impossible to demonstrate your ability to overcome them.

“Whereas traditionally, I think purchasing had a cloak of secrecy around it, in this more digitalised world where there’s more information available, there is just no space for incompetence. So when I present to more senior members of our business, I’ll just be as open as I can,” says de Ruiter.

Share your wins 

While procurement professionals are finally moving centre-stage, juggling their multiple roles as enablers, risk managers, business partners, communicators and strategic leaders, so the perception of procurement is changing across sectors.

With each pressing crisis and impending threat to supply chain security, procurement is gradually and increasingly being viewed as a high-value strategic activity and a critical component in achieving organisational objectives. A large part of this comes from sharing and vocalising wins to relay their significance and improve visibility of your team – just make sure your CEO hears about it too.

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