There is little doubt about the importance procurement teams place on adding value outside of cost savings. Every year, Procurement Leaders asks the CPO community to share their strategic priorities for the coming 12 months and adding value is always near the top of that list – the CPO planning guide 2020 found that creating value beyond savings is the second-most important priority for procurement chiefs, behind savings.
While procurement teams want to deliver and recognise they are capable of generating value beyond savings, there always seems to be something blocking the function from delivering on that completely. Why is that?
I considered this question with a group of cross-industry procurement executives at one of Procurement Leaders’ regular Member Exchange events and we came to some interesting conclusions.
Hosted by the HPE procurement team at the company’s brand new office in Dallas, we challenged each other and debated exactly where and how the function should pursue value.
To start with, the process is neither quick nor easy.
One of the group said it had taken some seven years of hard graft to get to the point where their function was now more deeply ingrained with other teams in the business and helping to deliver that value.
Others across the board had similar stories. It takes a lot of time and effort to get the point where a procurement organisation can deliver value and that is because the team has to work to build trust with other functions.
Trust takes years to build and can be destroyed in moments, so it has to be carefully crafted – something that was clear among all in the room. How does the function do that? A couple of solutions emerged from within the group.
One of procurement executive said they had set up a series of roadshows to tell as many people as possible about the function and what it could do. One participant asked how they had managed to ensure those people turned up, which was a good question. I would suggest getting some good coffee.
Understand how colleagues throughout the business define value as it relates to procurement. This will enable you to understand what you need to pursue and where you can best align your efforts with those of your stakeholders. One of the group pointed out that procurement shouldn’t have a separate definition of value to the rest of the organisation – the function’s interpretation needs to be fluid and take account of different stakeholders.
Procurement has got much better at taking credit for its work, but the group was happy to let stakeholders take most of the credit for any value their functions added. Why? It goes back to trust. If procurement is seen as grabbing the limelight then it will lose that trust. In the long-term, it is far better for the function to sit back and let the word of its capabilities spread throughout the organisation.
It was a heartening discussion and what was even more heartening was the fact that this group wants to stick together to ensure they make progress against some of their challenges and the solutions they came up with.
My key takeaway was that procurement has matured over the last couple of years. This was clear from the fact the function is confident in its abilities and what it can deliver. It knows it can deliver value and that it does not have to constantly talk savings – they will follow anything the function does.
It was a great group to host, talk with and learn from. I look forward to seeing what comes next.
This article is a piece of independent writing by a member of Procurement Leaders’ content team.