3 Things Stopping You Doing What You Need To In Procurement
Big things, small things – there are probably countless things stopping you doing what you need to in procurement. What blockers are in your path?
We’ve all had that day or that week. You get to the office with a task list in your head or in hand, sure that you are going to make a huge dent in it before you even get to your morning coffee. But then you sit down and within 10 minutes your plan is blown out of the water and you spend the rest of the day playing catch up, with the bottom of your to-do list getting further and further away.
This is the reality for many procurement departments too, just on a larger scale. While an individual’s blocker might be a rogue email or the wrong phone call at the wrong time, a department’s could be any one of a number of things, from lack of resources to questionable IT systems. The thing about the blockers is that most people will already be aware of them, either as conversation around the watercooler, or something that people think is the responsibility of senior management to sort.
However, responsibility doesn’t just rest with an individual or small group, it is on each and every person to recognise these blockers and help to minimise their impact. This list is far from definitive and will change from organisation to organisation, but they are common across the profession as a whole.
1. Being Distracted by the ‘Next Big Thing’
“Procurement deserves a seat at the top table.”
“Procurement needs to be seen as a strategic business partner.”
“The next big thing for procurement is…”
If you attend procurement events or read industry literature, much of the content will concern the ‘next big thing’. Category Management, Supplier Relationship Management, Business Process Re-engineering, Strategic Stakeholder Engagement – all of these things have been touted as procurement’s ‘next big thing’ at some point in the past decade.
But, hand on heart, how many of us could say that they have been fully achieved before the next big thing came along and stole people’s attention?
Too many of these terms have become useful jargon for consultants and advisors to use, rather than the core principles for procurement departments to be working with. The relentless pursuit of the next idea to make procurement a strategic partner has blinded the profession to a major blocker to progression – getting the basics right.
Instead of chasing the metaphorical white rabbit, procurement instead should focus on ensuring that it is delivering on its principal duties – ensuring good relationships with suppliers (and paying them on time!), delivering on time and in full and delivering value, not just savings, to the business.
This can be achieved in a number of ways including cutting down unnecessary tenders, ditching non-strategic strategic activities, creating more open supplier markets and two-way communication in relationships. Whatever the best way to do this, organisations need to find their own path to it which will ultimately allow them to get back to basics.
2. Not Being ‘Besties’ with your Stakeholders
For procurement to realise its goal of a more strategic role in the organisation, it needs to create good relationships with its key stakeholders. We’re not talking about being ‘besties’ with stakeholders, but gaining support and buy-in for ideas and projects.
There is plenty good literature written about stakeholder engagement, and many organisations talk a good game about the importance of procurement and supply chain. However, just as many organisations fail to live up to these words and aims when it comes to having it as part of their key tasks.
Getting stakeholder buy-in is a critical first step in the success of any project or for any part of an organisation. This can range from ensuring that maverick spending practices are limited, or that procurement has the necessary level of support in terms of resources, time and money to build robust and fully risk-managed supply chains.
There is something of a chicken and egg situation with gaining key stakeholder buy-in. Procurement needs to meet internal expectations to prove its value, but may need a level of support to achieve this.
There are good ways to engage internal stakeholders and for procurement to get an organisational BFF! Strong two-way communication, ensuring what is required from stakeholders is clear and developing plans in conjunction with stakeholders are all good things to bear in mind.
3. Being Buried in Paperwork
At the Big Ideas Summit 2020 in London, Justin Sadler-Smith, General Manager at Basware, argued that technology solution providers have failed procurement in not providing good technology solutions. This, combined with a lack of utilisation of existing technology, has led to many procurement processes continuing to be done manually – effectively burying procurement in a deluge of paperwork, wasting valuable time and resources.
This just isn’t an issue for procurement, but across the wider organisation. The lack of technology also has a knock-on impact on the quality of data being used by procurement. Poor data means procurement can’t fully define things like the length of its tail spend, or even understand fully what its annual spend with individual suppliers is.
This can then lead to poor contract management (and over spend) and poor supplier management, including late payments. Late payments lead to delays, which can then lead to organisational issues. Late payments can undermine supplier relationships, put the suppliers themselves at risk and ultimately cost an organisation more than the original payment was worth in the long-run.
It goes against one of the foundations of the profession and means that procurement fails to meet its own basic requirements of operation.
Unblocking the Blockers
Procurement, as the entry point for suppliers and the supply chain into the organisation, will frequently be where the buck stops. However, the blockers for procurement have the potential to derail everything from individual activities to organisational strategy making it a collective responsibility to solve.
For procurement, the blockers ultimately boil down to getting the basics right, meeting the needs of the organisation, putting systems in place for better management and delivering on its core principles. Something as simple as ensuring that appropriate systems are in place to facilitate on-time supplier payment can mitigate a number of risks, many of which can have a domino effect across the organisation.
Could unblocking the blockers be as simple as treating suppliers better? Perhaps not, but it seems like a very good place to start.
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