So your boss doesn’t get Procurement? Here is what your not doing and why it’s all your fault.
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In a recent CIPS article they reported on the fact that according to a recent 4C survey that half of senior management don’t’ get procurement.
It’s a great article even it’s a bit clickbate-y (go read it and then come back) and it does pose some interesting questions for the industry and how we supply chain staff go about our business within the companies we work for.
While I presume the intended purpose of the article is to shock us (and perhaps make us feel just that little bit unloved)I’m not sure I find it as any great surprise, perhaps the real challenge is understanding where we believe the problem lies.
Firstly, let’s be honest, senior management not understanding a department within their business? Well this is nothing new. In 2014 an atkearney news release they stated that “Only 10 percent of Chief Financial Officers have been engaged successfully and recognize the value and contribution of their procurement team”
That’s a shocking statistic isn’t it? But let me ask you this, why is it important that senior management both understand and value the contribution that thier supply chain team delivers to the business? Is it that as procurement professionals we have a secret deep down need to be loved? Why do we need to be “got” in the first place!
Well, the main reason is that by having senior management understand procurement it typically helps in two key areas:
1/ It helps get buy-in (senior support) for projects that you are/have launched
2/ It helps with funding (organizational or otherwise)
These reasons are of course not limited to procurement but are universal. Funding internal innovation programs is always a hard sell made even more difficult if those signing the checks don’t understand what the team delivers.
So is the problem that management are just not interested enough to find out what the engine room does? Or do we hinder ouselves through not promoting the right message, championing supply chain and the value it brings to their organization?
What people really think of procurement
In an attempt to understand what my supply chain colleagues think of procurement I conducted (albeit an unscientific straw poll around the watercooler). In speaking to some of my colleagues they place the blame at the feet of senior management citing reasons like:
“they never get involved to see what we do”
“all they want is cost reduction”
So what do the customers think? Those outside of the department often have a more critical view….
“why is it suppliers always deliver parts late”
“so and so is off on another jolly to see supplier x, it’s not proper work”
“procurement selected supplier x, they are supposed to be the professionals and look how bad THAT turned out”
Of course it’s easy for for people to hone in on issues (any department can through rocks at another) but if people are zoning in on issues then clearly the message about the value add isn’t hitting home.
Perhaps though the key reason is that Procurement teams and perhaps supply chain in a wider sense have failed to correctly market themselves to begin with
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I’ve worked with many organizations and am always to see that procurement teams generally get the rough end of the deal (as they are at the tail of the process). I think in reality procurement functions tend to face three major issues
1/ They don’t communicate in language the business understands
2/ They often have no vision or strategic plan (therefore becoming transactionally led)
3/ Easily described Issues/failures (i.e. late parts/poor suppliers) act as a mill stone around the neck and become what the department are known for.
Like any business function Procurement tend to get the most press when it’s bad press, these are the things that get reported up the chain of command. Away from the normal day to day working issues however, there are some methods of improving awareness. Some of this goes back to good old metrics in that without a credible standard allowing companies to consistently track and score procurement performance, many senior managers will (quite rightly) question the performance of and benefits delivered by their procurement teams.
Of course we should be open up to scrutiny. Significant procurement decisions, or decisions about procurement policy, should subsequently be monitored and evaluated (<a href=http://webarchive.nationalarchives.gov.uk/20090504154741/http:/www.berr.gov.uk/files/file37926.pdf>for example check out this well constructed piece on evaluating procurement benefits</a>
The thing is there are real benefits that procurement can bring,
AT Kearney has revealed the best teams deliver benefits at a rate that is ten times greater than the combined cost of their people, technology and external support. The organization also found leading procurement departments tend to generate double the return on supply management assets than their less effective counterparts.(<a href=http://www.bvdinfo.com/en-gb/blog/supplier-and-credit-risk-management/leading-procurement-functions-provide-benefits-ten>more here</a>)
So what is the procurement department to do if they are to ensure that they are both understood and valued within the business,
To answer this I think there are 8 key steps
1/ Have clear objectives (short, mid & long term targets)
2/ Have clear measures to track these objectives
3/ Communicate to the business in language and terms that are easily understood (often the CFO’s)
4/ Have a clear organizational structure which is as flat as possible
5/ Be transparent
6/ Celebrate your successes and look to promote them
7/ Learn from your mistakes. Be the biggest advocate of continuous improvement within the business
8/ Strive to empower the organization not restrict it.
Procurement professionals need to maintain considerable soft skills.
Renowned Professor John Kotters suggests that the reason for fostering knowledge regarding your teams function and buy in from the management team is that it’s crucial, even critical if you’re to make a real difference.
Real buy in, to truly “get” a function requires some form of shared vision, sharing in both the victories and failures.