In the face of continuous supply chain challenges, procurement may need to foster closer relationships with other departments to keep the business on track. For some, this will mean educating other teams about how the profession actually functions
Supply chains are a lot like plumbing. Most people rarely give them a thought until a blockage occurs, when panic sets in and the uninformed start to scrutinise how the system actually works.
For many organisations, blockages are coming thick and fast at present and supply chains are under pressure. So how can procurement professionals explain the current challenges to colleagues in other parts of their organisation, manage their expectations and prepare them for changes ahead?
Perhaps unsurprisingly, the most straightforward approach is to talk – to engage with other teams and departments to ensure they understand how world events are affecting the profession and to put difficult conditions or failures into context for them. Issues that may seem obvious to those in procurement are not necessarily as clear to others.
For instance, they probably know the Brexit deal was unclear because it was agreed so close to the deadline and left little time to adjust; and they realise that the pandemic then sent workers home and shut down factories and ports globally.
However, these colleagues might not truly understand the effects Brexit and Covid-19 have had upon procurement and supply and the unique challenges they have created – so you can use this as an opportunity to engage. Sharing information benefits internal relationships and the business overall by avoiding clashes and garnering support.
Engage and educate
Partly in response to these challenges, the philosophy of supply chain management has changed over a surprisingly short period of time. For several decades, the practice was largely about controlling and reducing costs while developing fast, just-in-time processes to minimise the amount of stock held and free up working capital.
The general priority was a drive to centralise procurement where possible to benefit from economies of scale. This has worked well for many organisations. Unless an element of the supply chain formed part of an organisation’s competitive advantage, the department was often left alone to run itself without much interference.
The result is that today, with supply chain issues now high on the agenda for almost all organisations, it is common for even senior staff and board members to lack an understanding of the complexities of shifting the focus from costs to resilience. The attention supply chain management has received and that valuable seat at the table can be put to good use to rectify this.
Though it is unlikely to fly if you go to the board to explain how supply chains work, you can still build this information into the wider business case. For departments that rely on procurement, it is worth explaining the supply chain process.
“It’s more helpful to think of the supply chain as a series of bathtubs linked by pipes,” says Jessica Spungin, adjunct professor of strategy and entrepreneurship at London Business School.
“Each of them has to fill at just the right speed and be at just the right temperature for the water to move at the right pace through the system. A blockage in one can cause some places to overflow and others to dry up.”
The art of balance
To extend this image, when the pipes become blocked, the temperature gauges may go on the blink and you end up turning taps on and off at random in an attempt to fix the problem. This simple metaphor highlights one key message: there is no such thing as equilibrium in a supply chain, it is a matter of constant adjustment and, therefore, there is no easy fix to the current situation.
Consider the issue of the lack of HGV drivers. A sudden influx of drivers would not, in itself, solve all the problems – they only move the goods. If companies start over-ordering for the sake of security, the excess goods could result in overstocked warehouses unable to take deliveries, high transport fees, travel congestion with long delays and perishables spoiled in transit.
Getting everything flowing correctly is an art. To make matters worse, the focus on keeping down costs has resulted in an aversion to holding too much stock. “A supply chain that was built according to a just-in-time philosophy can’t give you a buffer and resilience,” Spungin explains.
Business leaders might now decide they want to hold more inventory to hedge against supply problems further down the line, but they might not have sufficient contracts in place to do this or the warehouse space to hold it. It is important to explain these principles to show that the decisions taken are not oversight but have been calculated according to the long-term strategy for managing the chain.
Lead positive engagement
So how do you go about creating lines of communication and getting the correct message across? Procurement professionals need to understand what drives the different functions within the organisation, to address those needs if relevant and communicate effectively what they can do to support others. If you can’t meet their needs, make clear the limitations you are facing.
And it’s not about being in endless meetings and pushing to sit at the top table – though that helps – but finding ways to connect when hybrid working is making informal communication that much harder.
Allocating procurement professionals to specific teams is another strategy that may work for some. “I like the idea of my team members embedding themselves in a different function, so there isn’t an us-and-them relationship,” says a CPO with 20 years’ experience, who asked not to be named.
“In this day and age, decisions are being made throughout the organisation and you want to empower people, you want to make sure they have the knowledge to make the right decisions. If you are not giving them the relevant information, you can’t expect them to make the right decisions.”
What does this look like in practice? This CPO prefers her team members to actually sit with their customers in the same physical area so they are part of the team. “There’s so much that you hear through informal communications and actually having people working together,” she says.
The CPO likes her people to be embedded for two or three days a week – this means information flows both ways but they don’t “go native”. That way procurement professionals know what different functions need, they may pick up some additional skills as a bonus and “when you need to challenge them, you have the information to do that effectively”.
“When it comes to procurement, my philosophy is that I look at myself as a business partner and I’m here to solve business problems,” she says. “It’s not about over-communicating, it’s about being part of a team. We’re in it together.”