The Changing face of Procurement

In the last decade, procurement has built a solid reputation for managing costs, without doubt facilitated by the GFC. However, in my view, procurement must shift its attention towards managing the risks inherent in complex supply chains. Repeatedly, we read of cases where organizations and companies are exposed to the poor practices of suppliers embedded deep in their supply chains. These issues are rapidly exposed by social media communication channels. Furthermore, outsourcing practices have built a complex web of supply channels throughout Asia.

Another challenge and opportunity, for procurement is to bring probity and good governance to its way of working. While on one level this may appear to be an additional suite of tasks, I have learnt that senior management and boards can rely with confidence on professional procurement to deliver sustainable outcomes when its practices are supported by management through good governance and validated by independent probity checks.

In today’s world of rapid communications and disruption procurement has a strategic role to play in ensuring security, transparency, and best practice when supporting an organization to meet its goals.

In the past I would have said stakeholder engagement is the hardest part of my job. Yet I have observed our stakeholders also have difficult challenges. By working with them and our suppliers we’ve helped to solve their main issues and delivered positive outcomes for our business.

We have an opportunity in Strategic procurement not to be reactive and to rely on traditional procurement tools and methods. Weather we have a small team or a big team the hardest part of the job is to guide the business to support innovative practices and allow the procurement function to be more proactive in their approach to the markets from which we buy.

Couple of the practices that always worked for me are:

1. Set your goals high and achieve them

In my time with various organizations we started out as a procurement team with a focus on managing contracts with existing suppliers. Today, we have positive relations with our senior management leadership and stakeholders. We’ve delivered results that are independently verified and have even exceeded our own expectations when stress-tested by internal and external audits.

Reflecting over the past years I am proud of what my procurement teams have achieved and I acknowledge that this advice helped set us up for success. Today, we are recognized in the business as the strategic procurement team, a testimony to our efforts and ability to change.

2. Meet the promise

When I start a new role I spent considerable time and effort building our goals and strategies. At the time it was a challenge trying to help others see over a three-year horizon. We set ambitious goals and outlined a path and strategies to achieve them. For example, I made sure our category plans had stakeholder input and sign off. I set up supplier forums to enhance the involvement and participation of our suppliers in the goals of our business. I built personal development plans using a combination of on-the-job and formal external training. I have elevated Supplier Relationship Management practices to our critical suppliers with clear goals and accountabilities.

All along the way I made sure we did what we said we were going to do using visual reporting techniques and updates. This helps to build procurement’s credibility and integrity with the executive leadership, our stakeholders and suppliers.

On the other side one of the benefits I have enjoyed in my role is to communicate with our customers. Our executive management is supportive of strategies that help us achieve our customer expectations.

It is clear that leadership requires empathy and dialogue with the team and stakeholders, and needs to construct a path for the future of procurement people can believe. That is internal leadership and, indeed, I recognize that my peers are doing this very well. However, I would also add that leaders in procurement must sharpen their view of the customer and not just focus on what the suppliers are doing. To look up to see what the customers are up to will definitely add value to the strategies we develop.

In this age of disruption, procurement leaders, need to deeply understand our business strategy, know what our customers want and work with suppliers to achieve these strategies. The leadership contribution as procurement experts is to link suppliers’ performance to customers’ expectations. This will build the profile of procurement professionals as a true value-added contributor to the business.