The future of procurement depends on the function’s ability to partner and collaborate with stakeholders in the business. But the question remains as to how to improve this capability: Is it an issue of skills or is it more of a structural problem?
Procurement Leaders assembled some of the most senior and progressive thinkers among the procurement community to debate these questions at a summit in Melbourne.
The subject of business partnering relates to endeavours by CPOs to improve the interface between their buying team and their stakeholders. As the function’s role has become increasingly strategic, procurement teams have grown more reliant on the stakeholders’ input to deliver on its goals. To manage these collaborative partnerships, procurement professionals must actively involve key stakeholders.
However, there is a view that many of those outside the function have not evolved or matured as rapidly. And their perception of procurement is based on its past role as an administrative function. As such, many stakeholders are reluctant to engage buyers directly.
Attendees in Melbourne recognised that buyers’ activities may compound this view. Procurement professionals can often talk in a language that is entirely alien to others: phrases such as ‘category management’ and ‘SRM’, may sound like off-putting jargon.
The nature of clashing terminology is sometimes enough to cause disengagement between buyers and stakeholders. It is this specific link, which is crucial to the work of procurement, that is often dysfunctional.
A business partner – someone who acts as a liaison between procurement and the business – is often seen as a cure to this miscommunication. But is this the only answer?
Business partnering is a topic of particular resonance for procurement professionals in Australia. Many of the country’s leading companies are looking to transform to an operating model that institutionalises a role, which acts as a conduit between the business and procurement.
Attendees gained a sense of this from Medibank, which hosted the discussion. David Fittler, the health insurance firm’s general manager, property and procurement, outlined the company’s recent transformation and experimentation with improving procurement’s links with the business. Rather than recruit full-time business partners, Fittler has assigned additional responsibilities throughout the team to coordinate internal procurement activities to act as an interface and a one-stop-shop for key stakeholders.
Here are three more insights from the session:
Many attendees spoke of procurement’s comfort with its established metrics – chiefly relating to savings and compliance – and reporting these on an annual basis. Unfortunately, few individuals outside the function read or use this data. However, procurement teams derive greater stakeholder engagement – and impact – when buyers work collaboratively with others to develop the story of a project.
Dedicating resources to an FTE as a stakeholder interface was simply a step too far – this is especially the case for smaller Australian organisations for whom basic category management is still a problem. Rather, installing the precepts of partnering within the teams, was a more likely means to improve procurement’s impact in a resource-poor environment. This flipped the question from a topic about operating models to talent management.
This quote from one of the attendees it speaks to the basic proposition of delivering value from stakeholders, not just focusing on cost reduction. Here, buyers are required to agree shared objectives with key stakeholders and regularly update those for changing needs. This aligns supply interventions around more strategically important goals for the business but also ensures an element of flexibility around the supporting sourcing process: Where needs alter, procurement pivots.
This article is a piece of independent writing by a member of Procurement Leaders’ content team.