Partnering with Procurement to Make Good Things Happen
By Hugo Britt | July 28, 2022
The saltwater crocodile is one of the most territorial creatures in the world. The sight of a rival encroaching on its stretch of river will cause a crocodile to leap from lethargy to violence in a split second, and it will not stop until the threat has been driven away or destroyed. No wonder they haven’t evolved in over 200 million years.
By contrast, freshwater Nile crocodiles are famous for having a mutualistic relationship with an unlikely partner – the plover. These tiny birds perch inside the crocodiles’ mouths to pick morsels of food from between the reptile’s terrifying teeth. It’s a win-win arrangement – the plover gets a meal, and the crocodile gets clean, healthy teeth.
Partnering with procurement
Is your procurement team territorial?
Does your procurement team behave like a snapping saltwater crocodile? Here are some ways to tell:
- They take offense if anyone suggests there may be a better way of doing things.
- They monopolize supplier relationships as the sole point of contact.
- They don’t make an effort to speak the language of other business functions or understand their challenges.
- They tend to use a Waterfall or Big Bang methodology rather than working iteratively.
- They do not seek feedback on procurement’s performance
The consequence of this behavior is that stakeholders all over the business will try to bypass procurement rather than work with them to achieve their goals. Maverick spend goes wild, savings targets are not met, and procurement fails to realize any value beyond the most basic measures.
But what happens when sourcing professionals realize the importance of letting its guard down and begins working alongside other teams? Is it possible for other functions to recognize the benefits of partnering with procurement, too?
Let’s examine a handful of examples: IT, Sustainability, and Finance.
Partnering with IT
There’s little wonder why IT procurement experts are the most sought-after and highly paid in the profession. They wield massive budgets, deal with a complex category, and require technical knowledge to do their job properly.
Partnering with the IT team will help procurement balance specific IT requirements with best value for the business. Understanding the technology is essential, otherwise procurement will be working in the dark trying to source an IT product they do not really understand.
IT managers can be territorial, too. They know what software they want and can be highly resistant when the procurement team attempts to get involved in the purchasing decision.
Start the conversation by listening to the IT manager’s challenges, then show them what procurement can do, such as getting a better deal than that advertised on the supplier’s website, or finding other suppliers who offer the same or a better product/service.
Other ways procurement can generate savings in IT include:
- Reduce IT duplication and “shadow IT” (unapproved software purchases) across the business.
- Think strategically about long-term goals rather than reactive, short-term IT needs.
- Gain visibility and control of auto-renewing IT contracts, enabling the business to reconsider and renegotiate if necessary.
- Hold suppliers to account, putting in place KPIs that will track service and delivery levels.
- Develop relationships with IT suppliers that will open the door to innovative ideas.
Partnering with the sustainability team
Sustainability managers know they cannot achieve their goals without procurement’s help, which is why it’s surprising that these two teams are not more integrated in many companies.
Take carbon emissions, for example. While the sustainability team can put a series of changes in place to reduce the internal (Scope 1) footprint around the office, they will need procurement to reduce energy (Scope 2) and supply chain (Scope 3) emissions. This is a complex and lengthy exercise requiring an end-to-end review of the supply chain.
Other sustainable initiatives might include plastic usage reduction, lowering energy consumption, requiring suppliers to use a certain percentage of recycled material in their products, improving product end-of-life (reducing, reusing, recycling), purchasing greener company vehicles, and much more.
Slashing waste is a win-win for sustainability and procurement. Not only is it better for the planet, but any reduction in waste will inevitably mean an increase in cost savings.
Partnering with finance
One of the most difficult bridges to cross in many organizations is that between finance and procurement. Poor communication, divergent goals, territorial behavior, and a misunderstanding of what constitutes cost savings can make it difficult to reach across this chasm.
Strategies to improve this relationship and build a partnership include:
- Assigning a financially literate procurement team member to work with Finance.
- Understanding the CFOs goals and showing them how procurement can help. At the same time, it is important to demonstrate that procurement is about more than just cost savings.
- Integrate procurement and finance systems to create a single source of truth. More accurate data means enhanced budgeting and decision-making.
- Protect the bottom line by reducing supplier risk.
More tips for partnering with procurement to make good things happen
The best way to reduce territorial behavior in procurement is to have an open mind. Here are some other methods to boost collaboration:
Embed procurement members in different functions
This means a procurement team member is physically located within the team they have been assigned to support. In a remote environment, this could mean arranging access to the other function’s collaboration platform and virtual meetings.
Move beyond procurement jargon
Speak the language of different business functions. This may require some level of technological and financial literacy but it’ll help bridge the gaps between the different departments.
Understand other functions’ goals and challenges
Take the time to understand pain points and their ultimate objectives, then show how procurement can help.
Want to promote collaboration amongst functions and learn more about partnering with procurement? Una can help. Contact us for more information regarding the benefits of reaching across the aisle to save money, encourage innovation, and reach your goals.
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Do you have questions about group purchasing? Wondering how a group purchasing organization works to save you money, time, and effort?
Una’s team of Sourcing Advisors is here to help. Contact us to learn more.