Three Steps to Making an Impact When Starting a New Procurement Role
By Hugo Britt | November 29, 2022
“Welcome! It’s so great to finally have you on board. Now, I know settling into a new role can take a little time, so I don’t want you to feel under any pressure to make any significant impact straight away. I wouldn’t expect any real results from you until you’ve spent a month or two reviewing our current supplier arrangements.”
“Hmm – I think I can do better than that.”
Make an impact right away when starting a new procurement role
Doesn’t starting a new procurement role with confidence sound great? There’s pride in knowing you’re right person to deliver cost savings, drive value, and strengthen supplier relationships along the way. It’s possible – and even easier than you thought.
This is a common scenario for a lot of procurement professionals: it’s your first week in a new role, and you’ve been brought in to clean things up in an organization that has had no real procurement department in the past. There’s never been a focus on indirect spend, but the CFO knows that it’s fast becoming an urgent issue.
You’re looking to make a big impact within your first 90 days. Later this week you’re scheduled to report to the leadership team to present next steps, and you’d like to impress.
You need to be strategic about this and develop a big-impact idea. Knowing you can’t take on too much in your first couple of months, you need to get some quick wins on the board.
Step 1: Gain visibility of spend data
We know you’re eager to start cutting costs, but you’ll be flying blind without this essential preparatory step. Invest in a centralized e-procurement system, get people using it, then launch a discovery process to locate, clean up, and import past purchasing data into the system. Spend data could be anywhere – hidden in spreadsheets, email attachments, or with suppliers.
Having reliable data flowing into the system opens up several possibilities. A spend analysis will reveal areas of high waste, duplication, risk, maverick spend, and cost savings opportunities.
Don’t underestimate the importance (or the challenge) involved in gaining visibility into data. If you want to make an impact in 90 days, you might spend the first half of that time on this step.
Step 2: Call a group purchasing organization (GPO)
Group purchasing organizations like Una harness billions in buying power to unlock massive savings for organizations like yours. We do this by combining the purchasing power of GPO members to secure deep discounts on essential goods and services – particularly in indirect categories like technology, shipping and logistics, food distribution, corporate services, and more.
Gaining visibility into your spend first is important because it will enable Una to efficiently comb through your spend categories to identify which ones would benefit most from our collection of pre-negotiated contracts, and get you connected to average savings of 18% to 22%, fast. Our members are usually able to start saving within a couple of weeks.
This approach is faster and more impactful than the traditional method of sorting through current contracts and renegotiating payment terms with individual suppliers, or painstakingly reviewing and eliminating uncompetitive suppliers and launching a lengthy RFP process to replace them. Instead, working with a GPO will provide near-instant access to pre-negotiated contracts with major suppliers, saving money, time, and effort.
Step 3: Educate your mavericks
Spend mavericks, or people who make purchases outside of procurement guidelines, are expensive. They can cost the business millions of (avoidable) dollars every year, create extra processing time for accounting departments, increase the risk of fraud and non-compliance, and waste procurement’s time.
Maverick spend can also undo the benefits of joining a GPO. There’s little point in unlocking incredible discounts in areas such as office stationary or technology if employees simply buy what they need from the local shop or download a separate app instead. If you want to implement cost savings that stick, you will need support and participation from the whole organization to turn projected benefits into real savings.
There are several ways to address maverick spend. You could insist on a purchase order approval process, although this can create extra admin across the organization. It may be better to talk to your mavericks, discover why they are going off-process, and use their feedback to make it as easy as possible to purchase the right way.
Don’t underestimate the importance of education to help mavericks understand the bigger picture and how their actions are hurting the company financially.
Starting a new procurement role with confidence is possible. Contact a Sourcing Advisor to learn more about GPOs and how to implement a cohesive sourcing strategy from day one.
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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.