Procurement is an essential part of a successful company or organization, as we are “eyes and ears” to the external world on the supply side. We have the ability and responsibility to determine how our supply side plays an increasing role in our organization’s success, whether through quality, service, cost, value, risk management, or time to market.
Have you ever developed a “game-changing” procurement strategy that was never implemented or appreciated? Have you experienced “end-user” clients (however you define those that use the things you help procure) who challenge your improvement suggestions and perhaps find ways to prolong or avoid change, or even find clever ways to work around and avoid making the change?
Addressing these challenges is essential to turning strategies into results, and results are what our organizations are looking for to be successful.
Know How Much You Care
“People don’t care how much you know, until they know how much you care,” as Steven Covey states in his book, The 7 Habits of Highly Successful People. In our work, it is essential to not only engage with our “end-user” clients but develop an intimacy so that it is understood that our work’s purpose is to solve problems they have.
I like to think of our clients as our stakeholders, as I believe that procurement’s work and success is interdependent with that of our internal users and leaders. The work, success, and results are amplified when this term is extended to external suppliers and customers, as well.
That doesn’t mean we don’t have to utilize the skills of our profession, such as spend analytics, supply market awareness, sourcing strategy, negotiating and contracting, financial analysis, etc. We absolutely must. What it does mean is we cannot do that in a vacuum and must find the appropriate points to not only involve the stakeholder, but spend the time to understand the stakeholder’s needs: What benefits add value to how they add value to the organization? We need to, somehow, determine how to “be in their head,” “walk in their shoes,” and “be on their team.”
Delivering Extraordinary Results
I’ve seen extraordinary results when a function or group of stakeholders (e.g., maintenance, capital projects, IT, a business team, an executive leadership team, etc) view procurement resources as “the means to solve their problem” instead of “the group that must be obeyed” or “complied with.” Some examples of this include:
- Achievement of verifiable billion-dollar-value improvement goals that impacted EPS (earnings per share) of the company.
- Fifteen to 25 percent reduction of commodity price in one year, for a commodity that was previously thought to be bottlenecked (no ability to leverage the supply markets and going up 5 to 7 percent per year).
- Significant improvement in uptime, by improving supplier and supply reliability, and bringing supplier best practices and solutions to existing problems.
- Thirty to 50 percent reductions of maintenance and stores inventories through best practice implementation of planning, scheduling, inventory management and supplier managed/consigned inventories when this was viewed as an intentional part of Maintenance Excellence and Effectiveness efforts, freeing up significant working capital.
- Improved quality and 30 to 40 percent lower total cost by closer collaboration and upfront involvement in the capital projects process.
Compliance is important, no doubt, but it’s best done when the reason for compliance is clearly understood and lines up with individual and group goals.
An environment of interdependence enables us to have tremendous impact on an organization, far beyond what we might otherwise expect. It can also make our work a lot more rewarding and dare I say “fun.” (One definition of fun in the workplace is “wondering where the day went,” because one feels a tangible connection to the organization’s success and feels limited only by the hours in the day in terms of one’s ability to contribute.)
Creating the Dynamics of Interdependence
Some factors that help develop these dynamics include:
- A belief and understanding that procurement strategy must be developed in the context of functional, business, and organizational/company strategy. This has several important implications.
- We in procurement need to understand what these functional, business, and organizational/company strategies are. We need to have/develop business and functional acumen.
- The organization should understand how procurement can contribute to not only implementing the organization’s strategy, but also contribute to developing and improving it.
- Interacting with stakeholders in their day-to-day activity should be viewed as “part of our work,” not “extra work”. It enhances understanding on both sides, builds relationship and trust, and works to Covey’s principle of “caring how much we know, because they know how much we care.” It earns us the right to have a bigger impact, and we must then be ready to “step up” and deliver.
- Interaction with stakeholders can take several forms:
- Multi-level involvement, depending on criticality, from the “shop floor” to the “executive suite”
- Involvement on teams
- Leadership teams
- Task teams
- Supplier relationship teams
- Project teams
- Category or commodity teams (involve the stakeholder)
- Involvement in “the planning process” (routine, monthly, annual, strategic, etc)
- Becoming part of the key processes that our stakeholders have, including approval and review processes
Leading-edge companies are doing these things already. In fact, they go beyond the company or organization boundaries to engage their external stakeholders (including suppliers and customers).
There are specific “tried and true” methods to create these dynamics. We can cover some of those the next time.
Charles H. Wardlaw provides consulting services to help companies transform their procurement capabilities. He brings deep hands-on supply management expertise and executive leadership competencies gained with Fortune 500 companies over the past 34 years. In his most recent corporate position, he was vice president of procurement at BP, supporting the company’s refining, marketing, supply, and logistics businesses in the U.S. He now helps clients manage and accelerate the change of better connecting their supply-related people, processes, and technologies up, down, and across the functions and stakeholders of an enterprise to significantly improve performance in a measurable way. He can be reached at firstname.lastname@example.org and on LinkedIn.
This article was originally published at My Purchasing Center and has been republished with permission. For more stories, visit MyPurchasingCenter.com.