No other department has as much reach both internally and externally as procurement. It supports every department and employee in the company, commits significant financial obligations on behalf of the company and has the ability to view and manage consumption. And yet, in most companies, procurement is not seen as the “go-to” department. A variety of challenges can dull its reputation, but it is possible to turn these negative perceptions on their head.
Here are the Top 5 essentials to make procurement a “go-to” group:
- Find a strong leader. An effective procurement leader is NOT a procurement person – s/he is a sales and business leader who focuses on business objectives, leveraging procurement skills as a means to support them. An effective leader will build buy-in from the business, demonstrate a “service” mentality to foster a culture that enables the business units, and will develop people even as roles change.
- Create a meaningful set of goals. A vibrant procurement organization will know what the department stands for, what it is trying to accomplish, and what to communicate to the business units and service providers. While the group’s objectives will include cost reduction and savings reported, more importantly, the goals need to align with the company’s larger imperatives and demonstrate how procurement enables the business units to deliver on the company’s mission.
- Establish C-suite support. Procurement needs a consistent executive message that declares its significance to the business imperatives. Executive-level support provides a credible platform for procurement to demonstrate its value and build buy-in from the business. To maximize results for the enterprise, business unit executives should invite procurement to business unit meetings and department planning sessions.
- Motivate individuals. Empower members of the procurement team to be in charge of their decisions and their relationships, and the business units will want to work with them. Well-developed roles and activities will give the team members a sense of ownership of their actions and the outcomes they generate. Align goals for individual employees with the procurement group’s goals to drive the appropriate team actions.
- Build a good reputation. Procurement needs to execute consistently and market itself, reaching out to the business units and sharing success stories. Let people know you are the group to call when they need to get something done, and the team will become recognized as a partner for the business units. Once a good reputation begins to take hold, it will snowball, driving more procurement demand from the business and more interest from people who want to be a part of the team.
For procurement groups that can reinvent themselves, a domino effect brings other positive changes. Attrition will increase as other parts of the company look to hire people from the team. Demand to get into procurement will increase as colleagues realize its broad reach and influence. And business unit demand will increase, driving the need to assess procurement’s growth and focus.
For more information about how to turn your procurement department into a “go-to” group, contact Michael Kushner, Director, CFO Services, TPI at email@example.com or +1 435 327 2349.