Procurement can hold a variety of roles within an organization. They range from tacticians to trusted strategic advisors. Procurement’s destiny is determined by the construction of the Pillars of Procurement and understanding how to leverage key influencers to shape their organizational role. Throughout this blog series, my team at Corcentric provided insights about harnessing these key influencers. Doing so optimizes the Procurement function and helps Procurement gain a seat at the decision-making table.
Maturing your Procurement function starts by determining what role you want to hold and crafting a roadmap to grow into that position. This is where vision comes into play. It is important to understand this will be a journey. The gap between your team’s current state and desired end state determines the length and extent of this journey.
Focus on understanding your organization’s long-term goals before creating your vision. Then align the vision to how your Procurement function can evolve over time and embed itself within the strategic operations of the company. Think through the following questions:
- What support functions add value to your stakeholders?
- Are there processes and procedures requiring modification or development?
- Do any gaps exist within Procurement’s toolkit preventing operational efficiency?
- What critical skills does the team need to develop?
- What metrics and KPIs are best suited to accurately measure performance?
Becoming a strategic Procurement function requires carefully executed interactions with stakeholders, suppliers, and executive leadership. As my teammate John Sepcie mentions in his blog, “How we interact with other teams and organizations speaks volumes about not only our current reputation within our own organization, but also how we envision our team and role growing in the future.”
A focus on fostering a positive experience and achieving stakeholder target outcomes is critical in all interactions. A few simple principles help achieve this:
- Collaborate: take advantage of all opportunities to engage stakeholders and suppliers for input. Make our goal of enabling their success known and that Procurement is here to help achieve their departmental goals. We need to prove their input is valued and will be acted on.
- Team Mentality: emphasize our purpose is to serve our stakeholder teams in better achieving organizational goals.
- Reciprocate: acknowledge when a stakeholder or supplier makes a concession and look for opportunities to reciprocate. This builds trust and will lead to more sought-after collaboration.
As we all know, perception is reality. Stakeholders and suppliers won’t consider us to be strategic, proactive partners if we don’t take a thoughtful approach to how we position ourselves in their eyes. We need to guide this perception if we are to achieve the status we hope to obtain.
Procurement can focus on three core goals to avoid being confined to a tactical purchasing function:
- Proactive Planning: initiate the development and execution of strategic purchasing strategies, supplier performance management programs, and market assessment exercises.
- Cross-Functional Engagements: develop and nurture relationships with stakeholders, understanding each departments goals and the supplier characteristics they value.
- Gain Executive Influence: establishing visibility at the executive level into Procurement’s positive impact on organizational goals is critical to Procurement reaching a “trusted advisor” status.
Defining and implementing your Procurement team’s function is arguably the most important influencer of them all. Procurement cannot develop a clear vision, lay the groundwork for positive stakeholder interaction, or drive consistent perception without a well-defined function.
In the last article within this series, my teammate Benjamin Duffy outlined the 3 core functions a Procurement department can hold:
- Clerical: review requisitions and enforce policy and procedure. Very minimal value-adding activities occur within this function type and, as such, we don’t want Procurement to stay in this space.
- Tactical/Analytical: plan and execute sourcing events, manage supplier subscriptions or contracts renewals. Value provided is largely tactical, and still doesn’t fully utilize Procurement to the fullest extent.
- Strategic: proactively deploy Procurement strategies to impact organizational bottom line and create value beyond cost savings. Examples include conducting spend analysis and market assessments to develop strategic sourcing strategies or evaluating and managing supply chain risks.
Procurement teams looking to climb the organizational ladder have some work to do to gain their seat at the table. This begins by developing a well-crafted transformation strategy designed around the four key influencers discussed throughout this series. A maturity assessment is a great place to start. If you are unclear about how to get started, reach out to Corcentric for more information.
This May at the ISM World Annual Conference Corcentric’s Jennifer Ulrich will be delivering a more in depth presentation drawing on her own real world experiences about how these influencers can effectively elevate the role of Procurement.