Procurement professionals are indoctrinated into the profession with messages such as “you have to take the internal customer along with you”, “you have to persuade them” and “you have to get their buy-in first”.
But what if internal customers are wrong?
Procurement frequently defines itself as a “support function” whose status is derived by the amount of money it spends and the amount it saves. One reason for this is that procurement’s role is frequently not directly tied to key business goals. Instead, it is perceived to be about supporting other functions to achieve their objectives and reduce costs.
This mindset undervalues procurement’s potential to directly influence strategy.
Words to lead by
One test of procurement’s esteem can be found in its mission statement (if it has one). Mission statements communicate a lot about the aims, aspirations and values of the function and provide a window on its self-esteem.
Compare “To increase shareholder value by exercising our procurement expertise and leveraging group scale”
with “To provide the optimal supply with the best possible quality at the right time, on budget and based on total cost of ownership”.
Which function would you prefer to belong to?
A compelling vision directly linking procurement’s role to the business strategy is one step to building self-esteem, but must also be backed up with . . .
If procurement is to fulfill its potential, it must generate value. It does that by getting as close to the business as it can – by focusing on the business not supply relationships. The procurement function brings the analytic skills, enterprise-wide and supply chain perspective to influence the strategic direction of the business.
Only by building capability as the foundations for success can CPOs create respect and trust throughout the business. Building capability means putting in place development plans that build both hard and soft skills to lead teams and individuals who deliver results via procurement transformation.
well led, closely aligned with the business, actively engaging stakeholders and with the appropriate mix of leadership skills and technical strength, procurement strongly impacts business performance.
The acid test of success is performance delivery in line with board expectations, which in turn should build the esteem in which the profession so rightly seeks to be held.