How to Communicate the Value of Procurement to the C-Suite
By Anthony Clervi | January 21, 2020
Senior procurement professionals are essentially change managers. Once they transition from tactical to strategic procurement, their job involves finding value opportunities for their organizations, making the case for change, and then doing what they can to make that change stick. This may involve implementing a new software solution, reinventing an outdated purchasing process, or consolidating the supplier base.
Finding opportunities and making a plan is the easy part. The difficult part, though, is launching a change management program that will get every relevant stakeholder on-board with the initiative and ensuring compliance with the new way of working. It requires highly developed soft-skills such as influence and communication. But in the end, even these skills may not be enough if you are lacking support from the C-Suite.
Leading change management practice involves a combined bottom-up and top-down approach. While a ‘grassroots’ or solely bottom-up approach is possible, trying to orchestrate organizational change without senior management support is extremely difficult. More often than not, your efforts will fizzle out. For example, you may be able to convince the majority of the organization of the benefits of switching from a long-term supplier, but fail to convince a senior manager in another department who is resistant to change. Sometimes, the only way to get around a roadblock such as this is to have a directive come from above – such as from the CEO or CFO.
Why is support important?
C-level support gives authority and amplification to procurement change management initiatives. But that’s not the only reason why it’s important to communicate procurement’s full value to senior management.
Doing so enables procurement to:
- Increase or broaden its spend under management
- Partner with new parts of the business
- Expand its value offering beyond pure cost savings
- Increase its influence within the organization
How to gain the support of the C-Suite to communication the value of procurement
There’s little point in hoping for more support from your CFO or other senior stakeholders if they don’t know who you are. It is up to the CPO to arrange regular and ongoing face-to-face time to keep the senior manager informed and update them on procurement’s latest initiatives.
The best procurement leaders bring key team members along when presenting to senior management, stepping back to allow the project lead to explain what they’ve been working on. This not only helps build the profile of the team members, but will help senior management learn who the key players are in the procurement function.
CFOs, in particular, are numbers-oriented. Therefore, it’s important to back up any claims you make about procurement’s potential value with research from recognized authorities in the procurement space such as the Big 4 consulting firms.
This may include providing evidence for your assertions that:
- Hiring more procurement professionals will save the organization money in the long-run
- The potential cost savings that will flow from investing in Procure-to-Pay software
- Your procurement team is performing at a higher level than industry benchmarks.
Look out for reports like Deloitte’s annual Global Chief Procurement Officer Survey, McKinsey’s procurement research and The Hackett Group’s CPO Agenda.
Speak the language of the C-Suite
The C-Suite will not support procurement if they see the function as irrelevant to their priorities. Procurement professionals of every level should understand the key goals, targets and values of the wider organization and be able to articulate how the projects they are working on are linked to these goals.
Two hot-button issues that will always be on the C-Suite’s agenda are risk and innovation.
The great news is that procurement has the potential to positively impact both of these areas through risk reduction in the supply chain and by acting as the organization’s gateway to game-changing supplier innovation.
Build trust and share success stories
Before asking senior management to throw their weight behind procurement’s change agenda, it’s important first to secure their trust. Even a CEO may hesitate to announce their support for a project which may turn out to be a failure, so they need to be reasonably certain that the procurement team will deliver on its promises.
This can be done by establishing a track record of success in areas such as cost savings or process change. Reporting is important (especially for numbers-driven CFOs), but don’t fall into the trap of sending snooze-inducing spreadsheets that lack any sort of story or personality. Share success stories such as the onboarding of a socially-responsible supplier or the implementation of an innovative technological solution, and always be sure to link everything in your reporting to the C-suite’s priorities (see point three).
Winning the trust and building a beneficial relationship with your C-Suite executives will take time and commitment – especially in the initial stages of getting your foot in the door. Ultimately, however, having the C-Suite’s support will make the job of procurement change management infinitely easier.
Need help overcoming C-Suite objections? Una’s team of expert Sourcing Advisors are here to help. Contact us to learn more.