How to Build Procurement Influence
We successfully leveraged the COVID-era attention we got – now how does Procurement remain relevant and authoritative in the long term? Alex Saric shares how to build the influence to make your presence felt.
The pandemic has had widespread adverse effects, from health to finances to education. Yet for procurement leaders it has also been an opportunity to shine. As supply disruptions, cash flow and protecting margins became boardroom priorities and front page news, procurement was called upon to save the day. And for the most part the function has risen to the challenge. Companies and citizens should be thankful.
Yet to capitalise on their moment in the sun and remain on the board meeting agenda, CPOs must demonstrate how they can contribute long term value as well; how they can help companies restore growth via innovation; how they can improve the brand by driving CSR improvements; and much more. To do so, CPOs have to build their influence within the organisation.
Influence is Essential
There are a couple of reasons for this. First, the more strategic objectives procurement can support increasingly involve other departments and/or suppliers. Supporting company cash objectives requires collaboration with finance. Driving innovation requires collaboration with production, sales and suppliers. Sustainability often must be aligned with related departments and involves supplier collaboration. For that alignment and collaboration to take place, influence is key.
Second, increasing procurement’s impact requires transformation, with accompanying investments in people and technology. Digital transformation helps free capacity via automation, improve decision-making with better access to insights and scale collaboration by connecting stakeholders. The number one obstacle identified in a Forrester Survey to getting a digital transformation off the ground is executive buy-in / budget. Influence is essential to overcoming that initial obstacle.
The successful path to building that influence will certainly vary based on the organisational culture, individual personalities and other factors. That said, there are some common factors I have found to be important.
Sell the Vision
Too many organisations don’t comprehend how procurement can add strategic value and contribute to many objectives. It is essential to craft and clearly articulate a compelling vision for procurement and the various ways it can add value. And not just the what, but the how and the path to get there, including tangible benefits that can be achieved at each stage. Particularly in times of crisis, there will be resistance to any vision that requires years of investment to see the results. Explain precisely how procurement can deliver on or contribute to each objective, what’s needed and the timeframe.
When presenting the vision you should be simultaneously making the business case for necessary investments. You are selling your vision: remember that the best sales people understand how to speak to (after first listening to) their audience. There are a few “tricks” I’d recommend. First, build the case from the bottom up. The ROI on procurement investments is often tremendous and leaders naturally balk at a large top level number. But by explaining each value driver separately, each with a small contribution that seems logical and is easy to accept, you can build up the overall number in a way that leaders understand and accept. Show the typical range of benefits for each driver (vendors or consultants can help you with this information) and lean towards the low end on most, to avoid setting goals you may not achieve and increase executive confidence in the overall ROI.
Second, focus on value drivers that will resonate based on your current organizational pains. If cost containment is top of mind for the board, explaining how investments will bring more spend under management and the typical savings on each dollar that is managed is a logical place. For others, minimising supply disruptions or compliance costs may be top of mind. This helps the message resonate.
Lastly, back up the business case with example of companies (ideally competitors) that have achieved this. That plays on human emotion – anecdotes resonate and no one wants to feel their competitor is outdoing them. Together this approach is very likely to result in a convincing business case supporting your vision.
Show them the Money
Painting that clear vision is essential, but can damage your influence if not followed through. Hence, it is key that you deliver quick wins to demonstrate the potential, thereby building organisational support and credibility. Be sure that is built into your plan. What those early wins should be will vary by organisation. For some, it may be key to drive some quick savings. For others it might be improving visibility in the supply chain so they’re not disrupted and dealing with some of the issues they’ve had during COVID. By showing early progress against your vision, you will gain tremendous credibility as a trustworthy partner. You can then scale up over time, to more processes, objectives, spend, etc.
Values Matter
I have found that demonstrating certain values is as important as demonstrating results – you need both. Top of the list for me is ownership. If procurement is to build its influence, it needs to take ownership of objectives. Naturally, procurement will rarely be able to control everything required to succeed. That lack of control is often an argument against taking ownership. Resist any such pushback. Yes, there is risk to taking ownership of a result you can’t fully control. But the real risk is failing to deliver because of internal confusion. I’ve seen far too many initiatives fail because no one felt ownership and hence no one stepped up to steer the effort and course correct when needed. Building a culture of ownership, in procurement or any other function for that matter, is key to building influence. Your team won’t lead if they don’t feel a sense of ownership. If they do, you will establish yourself as the go-to team for strategic initiatives.
Less controversial but equally important, is demonstrating integrity. The more success depends on others, the more integrity is key. We may have moved to a heavily virtual workplace, but relationships are still key to success in many areas, especially building influence. Unless your team demonstrates integrity in every interaction, you will struggle to build influence. This depends more on your people than any policy of course, so it’s harder to fix if an issue exists, but leaders must insist on it and jump on any potential shortcomings.
Building influence is an art, not a science. If procurement is to make its move from the backroom to the boardroom permanent, CPOs will need to master it. For all its horrors, the pandemic is a rare opportunity to elevate the function. By painting a clear, compelling vision, effectively executing against the first stages and demonstrating the right values, CPOs will be well positioned to do just that.
