Aligning Procurement to Serve and Empower the Business
3 essential questions every procurement leader should be asking to better align their organization.
“To transform the [Procurement] function,” wrote Corcentric Procurement Director Jennifer Ulrich recently in Spend Matters, “they’ve got to first change the way other business units perceive and engage it.” She was commenting on the fact that even highly mature Procurement organizations have a lot of work ahead of them.
That’s obviously a challenge, but it’s easy to determine whether or not your team is headed in the right direction. It starts with making an honest, objective assessment and asking three essential questions.
What is our mission and vision?
Procurement first needs to determine where it’s headed and how it plans to get there. The function should determine whether or not it has shared this mission with stakeholders and gained their support. Many Procurement leaders have yet to outline a solid mission for their team. They’ll certainly establish annual goals (mostly tied to savings), but they’re rarely thinking about Procurement’s full potential to empower the business. Misaligned priorities lead to an immediate disconnect with the business. They can even stir up resentment. How many times have we all heard comments like, “Procurement only cares about savings” or “Procurement doesn’t understand our business”?
Ideally, Procurement should build an engagement plan to guide its interactions with stakeholders. This plan should not only clarify the vital role Procurement plays, but also speak to its mission. The conversation can’t be one-sided. With input from both sides, Procurement will learn valuable lessons of its own. The function will gain a better sense of the stakeholder group’s goals, objectives, and mission. These talks typically lead to better engagement and a more prominent seat at the decision-making table for Procurement.
What type of resources are we hiring?
To better align with its peers, Procurement should broaden its scope during the hiring process. Resources who can confidently speak the language of IT, Marketing, Finance, and other units will naturally foster better partnerships with those units.
Procurement groups don’t generally tend to think outside the box when it comes to bringing talent aboard. They default to “apples to apples” comparisons of resumes and ultimately wind up hiring the same kind of people again and again. Those same kinds of people leave them with no choice but to produce the same kind of results. It’s not hard to see why these practices are the norm. After all, critical thinking and collaboration are much harder to assess than years of experience.
How does the supplier community view Procurement?
Do suppliers think of Procurement as a hurdle, a hindrance, or a bottleneck? If so, the function’s probably poorly aligned with the business. Every organization wants happy suppliers. They want a supply base populated by engaged, responsive partners who make it easier to drive savings and efficiency. If Procurement isn’t seen as an enabler for these things, you’re doing something wrong.
Why should Procurement care what suppliers think? First, when it comes to business alignment, angry suppliers will certainly let other stakeholders know how they feel about the function. This could leave Procurement struggling with additional obstacles internally. Second (and more importantly) a happy supply base means access to better products, services, and payment terms. In short, it means a competitive advantage for the business.
Total alignment is never easy to obtain. That’s especially true in the volatile, evolving world of Supply Chain Management. Getting there often means confronting uncomfortable truths and carrying out uncomfortable conversations. However arduous, the effort is always worth it. Once Procurement has aligned itself with the business, stakeholders will actively seek out its support and treat it like a business partner. They won’t do this because they’re required to. They’ll do it because they want to.