Procurement Teams Need To Be Strategic Partners
A procurement team should be identified as a strategic partner in achieving the business's goals. However, too often procurement teams are seen in a negative light by other parts of the business - as mere gatekeepers or roadblocks, with little value to add. This is bad news for the organisation's ability to achieve its goals efficiently and effectively.
Consider an all too common example: Imagine there's an engineering team within a business that wants to engage an engineering company. To do so, they need to use procurement to run the tender and evaluation process, and put the contract in place for them. The problem comes when this engineering team sees procurement as a hoop to jump through rather than someone that can add value.
In a lot of circumstances, the decision or the strategy has already been made - the engineering team wants to renew a certain supplier's contract, say - and procurement is then engaged at the last moment. But by that point they can't add any value. Had the engineering team engaged procurement at the front end of the process, the procurement team might have been able to:
- identify other competitive suppliers in the market, that may be able to provide a better service at a more competitive price, or,
- if proceeding with the same supplier, implement a strategic negotiation process to improve the ‘pain points’ of the existing agreement.
The result of all this is the procurement team ends up just having to rubber stamp processes to ensure time frames are achieved, while not necessarily agreeing with or having any control over the procurement decisions being implemented. Understandably, this is frustrating and can lead procurement to become a bit of a road-block, fighting other teams in the business by forcing compliance through unnecessary procurement forms and onerous administrative burdens. This creates a confrontational relationship between procurement and the business units, with an 'us versus them' dynamic of teams working against one another instead of together towards the common goals of the organisation.
If that sound like the working relationship in your business, something needs to change.
How can procurement teams move towards becoming strategic partners?
Poor historical relationships can make moving towards a strategic partnership a difficult task. Difficult, but not impossible.
It starts with the procurement team understanding their role as a service provider to the business. Procurement needs to show they can add value by being good at the basics and delivering effectively. Engaging the assistance of an outside expert is often a good way to get the ball rolling on this, and to sidestep the issue of a previously negative relationship - the business may well be happier giving the procurement team their projects if they know someone else with proven experience in the specific type of procurement process is involved.
Part of demonstrating value is the procurement team sharing their knowledge of the market they're working in. They know about the commodities, the suppliers, the key players - when they communicate that knowledge to the business they can add real commercial value by allowing the business teams to make better decisions on who to purchase from, or even whether it's worthwhile consolidating multiple services under one agreement.
Procurement teams should also aim to streamline their processes. Sometimes the policies and guidelines are over complicated, rigid, and not aligned with the value or potential risk of the project. Sure, there are always going to be those high-end projects where every template must be filled and box ticked. But there has to be a common-sense approach to how quickly some of the other procurements can be delivered. A 12-month procurement time frame for a routine contract borders on ridiculous. It's all about striking the balance between complying with your organisation's procurement policy while still being able to react to business needs in an appropriate time frame. When you evolve your procurement policy and purchasing guidelines to reflect the kind of work you deliver, you'll begin looking less like a roadblock to the rest of the business.