Most everyone has heard of Goldman Sachs, the global banking and securities firm. And by now, most have probably heard of Greg Smith, former executive director and former head of the firm’s US equity derivatives business in Europe, the Middle East, and Africa.
That’s because he resigned from the firm in March with a blistering column that ran in The New York Times, slamming the culture of Goldman Sachs and saying that management there concentrates on making money at the expense, often, of the interests of its clients. I don’t know if Smith is right about his assessment of the firm, or if Goldman Sachs’ rebuttal is right. But I think there are a few lines from the column that hold lessons for procurement.
One is the statement that leadership is about ideas. Ideas means innovation. For procurement, many of the ideas and much of the innovation can come from the supply base. And, it’s procurement’s responsibility to encourage suppliers to provide those ideas, and then to make sure they get a fair hearing within the company.
Another statement refers to the time spent internally asking how to help clients versus how to make money from them. For procurement, the clients are the individual business stakeholders in functions such as engineering, marketing, manufacturing, human resources, among others.
Procurement should be spending time figuring out how to help those clients achieve their own business objectives rather than concentrating exclusively on cutting costs. As Cynthia Dautrich, global procurement officer at Kimberly Clark, says: "You have to be a strategic growth partner" for the stakeholders in your company. The operative word there is "growth".
The third statement is that "if clients don’t trust you they’ll stop doing business with you." Again, procurement’s clients are the business stakeholders, and gaining their trust is critical to procurement’s success. But trust can be a barrier for procurement, says Jeff Haye, senior vice president for supply chain at Bay Valley Foods. You gain that trust by making the effort to understand the stakeholder’s concerns and goals.
Having a passion for ideas, client service, and the building of trust is essential for everyone in business, particularly for procurement, which controls so much of a company’s expense budget. Make sure your team has every bit as much of that passion as you do.