The way procurement is viewed depends almost entirely upon the organisation it serves. For some businesses, procurement shapes the company direction and has the ability to deliver cost leadership.
From the point of view of the marketing department, procurement can be a much more difficult process and the relationship is often an antagonistic one. Stereotypically the two professions come from completely different ends of the spectrum, with the marketing professional focusing on brands and creativity while the procurement professional focuses on suppliers and return on investment.
Put simply, procurement has a lot of "making up" to do and is frequently accused by co-workers of focusing too much on cost savings, working as gatekeepers, damaging creativity and negatively impacting brand perception.
So, how do you get different stakeholder groups on board with the procurement department’s business objectives? From working with our customers, I’ve found there are actions that can be taken to ensure the department’s value is recognised internally:
1. Understand the business drivers
Just like all other departments, procurement is providing a service to its business. Therefore relationships with internal stakeholders need to be managed just as much (if not more) as those with external customers. To create better cross-functional relationships with other departments within the business, procurement should carry out the following tasks:
• Ensure there is good knowledge of that department’s business objectives
• Understand the drivers that create value for each team
• Establish what “good” looks like in different parts of the business
2. Increase visibility of procurement activities
Procurement has moved on from its traditional role, focusing purely on cost saving. Today, the department is continuously being challenged and set new key performance indicators (KPIs), such as ensuring the organisation works with greener suppliers who meet sustainability requirements, managing risk and encouraging supplier innovation.
Unsurprisingly, cost-savings is still argued to be its most accurate performance measurement. In fact, when Xchanging questioned 830 procurement professionals about what KPIs they considered to be most important to the success of their procurement operations, nearly half responded with "delivering realised cost savings". But this often leads to procurement departments neglecting to find metrics to measure their other successes, and in turn not being fully recognised as a strategic partner to the business.
One approach that can be taken to increase the visibility of procurement activities is to consider non-cost reduction innovations and benefits, and then label your team to address each one of these challenges. For example:
• Risk managers
• CSR specialists
• Finance specialists
• International consultants
• Innovators
Procurement departments should then proactively open bi-directional conversations about how procurement can support and add value to the different business units, capturing efficiencies and sharing this information with all stakeholder groups.
3. Improve engagement with internal stakeholders
Around two-thirds of procurement decision-makers worldwide identify "internal stakeholder engagement" as a challenge, with 14 per cent claiming it is an extreme challenge. Even more worryingly, a "lack of internal engagement" is cited as the number one reason for targets not being achieved.
The modern procurement practitioner needs to be able to build rapport with stakeholders, engage with them, and communicate successfully in one-to-one and small group situations. To start with, work on the team's communication and presentation skills so that you can speak with confidence and precision - whether you’re talking to a stakeholder positioned above, below or beside you. Learn to speak their language in order to gain influence. What’s important to them? What are their challenges? How can you help?
Another step is for procurement to join meetings with senior stakeholders so it can align its activities to the current strategy and the higher management gain an understanding of procurement objectives (which should always be in line with the organisation’s objectives) and value-add. This in turn increases internal procurement advocacy, and these stakeholders can then work with you to ensure the right messages about procurement filter down through the business ranks.
☛ Noelia Gomez Rivero is new business manager at Xchanging Procurement