5 Tips For Starting a Greenfield Procurement Function
By Hugo Britt | January 19, 2021
Have you been tasked with starting a procurement function from the ground up? If so, you know it can feel like an impossible job.
Luckily, we’ve put together a few tips you can use to jumpstart procurement without getting overwhelmed by the amount of work laid out in front of you or distracted by the details.
What is greenfield procurement?
“Greenfield” procurement means starting up a procurement function in an organization where none has previously existed.
Usually, this happens because the organization is experiencing growth. As spend increases and more people make purchases on behalf of the business, for example, waste and inefficiencies become inevitable.
These missed opportunities may include:
- Leaving cost savings on the table
- Little or no spend visibility
- Poor value for money
- Regulatory non-compliance
- Risk of brand damage
Making the decision to start up a procurement function is one of the smartest moves a business can make. It means handing the job of sorting out the organization’s spend to a Sourcing Hero; a procurement professional who can turn a complex challenge into an opportunity for generating cost savings and other types of value for the business.
Here are five tips for somebody tasked with starting a procurement function from scratch.
1. Understand your goals
Let’s say you have 100 days to prove your value to the organization. What are you going to achieve in that period? Don’t assume you know what the organization wants you to achieve. Instead, talk to your stakeholders to discover their expectations.
Start with your boss. Perhaps procurement reports into the CEO, or the CFO, or the COO. Reporting lines can give a hint as to what procurement’s priorities will be. The CFO is likely to be focused on cost savings, for example, while a COO will be more concerned with building a strong supply chain.
You can assume that finding cost savings will be the number-one priority in 99% of organizations, but other goals may include lowering risk, improving visibility, ensuring business continuity, supporting corporate social responsibility, or building better relationships with suppliers.
Once you’ve created your list of goals, be sure to get agreement on them with your key stakeholders, and work out how you will track and report on your progress.
Finally, be realistic and don’t set yourself up for failure by nominating impossible-to-achieve goals.
2. Assess the team
Perhaps you’re a one-person procurement function or work with a very small team. Maybe part of your role will involve hiring others to help build the function. Whatever the situation, be sure to take resourcing into account when setting your goals.
Next, think about skillsets. Are your team members procurement professionals, or are they generically-skilled “helpers” from other functions? Is there time (and budget) to rapidly upskill them in procurement basics? These are important questions to ask as all of these factors will play a role in your success.
3. Analyze spend
This is by far the biggest task you will face when establishing a greenfield procurement function.
If you’re very lucky, the business will be using a software suite (an ERP or tech stack) to track expenses and approve purchases, and you will be able to generate a report at the press of a button. If you’re unlucky, spend tracking will be messy or non-existent, with records scattered across multiple databases such as spreadsheets, emails, and credit card records.
Therefore, one of your first jobs may involve purchasing a procurement tracking system for the business. The data will then need to be standardized or “cleaned up” to make sure it can be captured correctly in a report. Next, segment your organization’s spend to understand who your strategic and non-strategic suppliers are, where the biggest risks lie, and get a sense of your organization’s tail spend.
If done correctly, spend analysis will immediately reveal opportunities for quick wins in terms of generating cost savings and addressing inefficiencies. More importantly, it will serve as a starting point for a longer-term procurement strategy.
4. Align procurement to business goals
One of the great things about starting a greenfield procurement function is that it gives you the opportunity to avoid making the same mistakes so many other procurement teams make.
One of the main mistakes to avoid, for instance, is becoming inward-facing or unaligned with the wider organization. Staying aligned is an ongoing process. It involves keeping your finger on the pulse of the business, communicating regularly with stakeholders about their challenges, thinking beyond cost savings, and operating strategically.
Keep in mind that procurement can align itself not only at the enterprise level, but to functional goals as well (such as Finance goals, Corporate Social Responsibility goals, and more).
5. Assess your sourcing options
How are you going to carry out the task of sourcing? Assuming you have a lean team, the job of researching suppliers, negotiating contracts, issuing RFPs, and implementing new spend policies can be daunting.
Three options are:
- A hands-on approach: This in-house option involves getting your spend data in order, researching suppliers, and finding improvements category-by-category.
- Hire outside expertise: There are countless procurement consultants for hire who can clean up procurement data, understand spend analytics, implement new technology, and more.
- Partner with a Group Purchasing Organization (GPO): Save time, money, and effort by outsourcing some of your procurement activities to a GPO, an organization that can leverage the collective buying power of its members to unlock discounts that would otherwise be beyond reach. Employed properly, a GPO can help bring categories under control and unlock much more than cost savings.
Get an inside look
For more details on how to jumpstart procurement and an inside look at Una’s process, download our free playbook.
Our Sourcing Advisors will walk you through the process of developing a comprehensive sourcing strategy step by step, to facilitate sourcing efficiency and profitability.
Ready to tap into additional resources? Contact Una today to discuss how we can help you jumpstart procurement.