How well we sell procurement’s value to the business is key for its future success.
Many heads of procurement still struggle for support and greater recognition whilst those who have succeeded in establishing strategic procurement, admit that it requires a constant concentrated effort to maintain a respected position within all aspects of the business. In both cases, successfully expanding scope and influence is dependent upon making the connection between procurement excellence and sustainable business growth and profitability. It is therefore critical that procurement communicates it’s intrinsic value to the organization to gain the desired influence.
To do this requires CPO’s to define the strategic value proposition for procurement to set the expectations and then to address the perception gap between these expectations and the value stakeholders perceive as reality.
Procurement is a communications business in which practitioners must both give and receive information from the organization’s senior management, stakeholders (such as finance, legal and IT), suppliers and from other external stakeholders. Whilst practitioners sit at the centre of a complex communication network, very few CPO’s assign significant priority to develop their teams communication skills.
Communication is key to increasing procurements scope and influence. However, CPO’s must move their teams from communicating unconsciously, towards a purposeful pro-active stakeholder engagement strategy, to expand understanding and acceptance of the benefits to be gained from integrating procurement tightly into the businesses.
Why do we need a strategically led approach to procurement?
Without effective strategies to coordinate procurement and to manage supply markets, organizations supply chains lose their way: costs rise; risk increase, customers and other stakeholders are let down and the reputation of the organization is damaged. Such damaging consequences clearly points towards procurement being of strategic importance in today’s increasingly outsourced, extended supply chain world.
Stay tuned for Part 2 when I will discuss the challenges of integrating procurement with the business.