Moving from spend control to spend influence
For decades, procurement has operated under a command-and-control mindset, focusing on centralized approvals, strict compliance, and risk reduction. While these methods have their merits, they often lead to unintended consequences that can hinder business agility.
The Problems with Over-Controlling Procurement
Let’s break it down.
First and foremost, over-controlling procurement slows down execution. When every purchase requires multiple layers of approval, it can take ages to get even the simplest of contracts signed. This sluggishness frustrates teams who need to move quickly in a competitive market.
In an age where speed is often equated with success, procurement must be able to keep up with the pace of business.
More Maverick Spend
This may sound counter-intuitive, but strict control can encourage maverick spend; those off-contract or unauthorized purchases that can spiral out of control. When stakeholders feel they can’t rely on the procurement process to meet their needs promptly, they often seek alternative solutions.
This undermines the procurement team's authority and can lead to higher costs and inconsistent quality. Maverick procurement can create a fragmented purchasing landscape, where different departments operate independently, often resulting in duplicated efforts and missed opportunities for bulk discounts.
Stakeholder Frustration
And let's not forget about the frustration felt by business stakeholders. When procurement is perceived as a blocker rather than a partner, it creates a rift between departments. Instead of collaborating to achieve common goals, teams may view procurement as an obstacle. This perception can lead to disengagement, resulting in missed opportunities and wasted resources. Stakeholders may begin to feel that they are constantly fighting against procurement rather than working alongside them, which can further hinder organizational cohesion.
Limited Agility
Lastly, the rigid control model limits agility. As the market evolves, the ability to pivot quickly and make informed purchasing decisions becomes vital. But with a heavy reliance on traditional control measures, organizations may find themselves unable to adapt to new challenges and opportunities.
The Rise of Spend Influence
So, what’s the alternative? Enter spend influence. This approach shifts the focus from rigid control to collaboration and strategic alignment. Instead of merely enforcing compliance, procurement teams can work to influence and guide purchasing decisions across the organization. This fosters innovation and aligns spending with broader organizational goals.
Spend influence encourages procurement professionals to build strong relationships with stakeholders, share valuable insights, and promote best practices in purchasing. By doing so, they can help internal teams make informed decisions that consider the total cost of ownership, ultimately leading to better outcomes for the organization.
Furthermore, spend influence enables procurement teams to act as trusted advisors. By understanding the unique challenges and needs of various departments, procurement can tailor their approach and provide relevant solutions. This fosters a culture of collaboration, where procurement is seen as a partner rather than a gatekeeper. When stakeholders feel supported and understood, they are more likely to engage with procurement processes and adhere to established guidelines.
Best Practices for Enhancing Spend Influence
To effectively enhance spend influence, procurement teams can adopt several best practices:
- Build Relationships: Developing strong relationships with key stakeholders across the organization is crucial. Regular communication can help align interests and foster collaboration. Organizing workshops or informal meetings can provide opportunities for procurement to understand the needs and challenges faced by other departments.
- Educate Stakeholders: Providing training and resources can help other departments understand the value of procurement processes and the importance of strategic sourcing. By demystifying the procurement process, stakeholders are more likely to engage positively.
- Share Success Stories: Highlighting cost savings and successful collaborations achieved through procurement efforts can demonstrate tangible benefits. Showcasing these achievements can persuade others to align with procurement strategies and foster a sense of shared success.
- Leverage Data: Using data analytics to present compelling arguments for strategic purchasing decisions can influence stakeholders' choices. By showing potential savings or efficiencies through data, you can make a stronger case for adherence to best practices.
- Promote a Cost-Conscious Culture: Encouraging teams to treat every dollar of company money as if it were their own can foster a culture of responsibility and accountability. This mindset can lead to more thoughtful purchasing decisions across the organization.
Flexibility: The Key to Successful Procurement
While embracing spend influence is essential, flexibility remains a key component of effective procurement. There will always be situations that require a tighter grip on spending, whether due to budget constraints, market fluctuations, or specific project needs. The ability to dial spend control up or down as circumstances change allows organizations to manage risk while still promoting innovation and strategic sourcing.
For example, during economic downturns, tighter controls may be necessary to ensure that every expenditure is justified. Conversely, in times of growth or innovation, a more flexible approach can empower teams to experiment with new suppliers or invest in cutting-edge technologies.
Ready to make the shift to spend influence? Learn how Una can help procurement teams drive real savings and value. Contact our team to get started today.
