Plenty of Procurement team man-hours go toward tactical execution – there’s a lot that needs to be done to keep the trains running each day. However, Procurement pros are in a unique position to become higher-level strategists within their organization, guiding business forward. To take this position, Procurement teams need to become agents of change.
The Law of Life
Kennedy once said, “Change is the law of life. And those who look only to the past or present are certain to miss the future.” I don’t usually kick off an article with a quote, but this one speaks too well to the reasons for becoming a change agent (and the risks of not doing so). Our competitors grow and evolve. One of the great killers of an established market player is the inability to keep up. I’m not saying anything new here, and the change-or-die edict is nearly cliché these days. So why are so many companies bad at shaking things up? More to the point, how is Procurement supposed to be the catalyst here?
The answer to the first question can be boiled down to a simple answer: Companies are bad at change because change is risky, expensive and time-consuming. The bigger the company, the heavier the lift. And, hey, all of our success came from doing things the way we did them last month, last year. Change introduces an unknown variable.
The second question requires a little digging.
Procurement’s Role in Change
I work with a lot of suppliers across each of my clients. When asked the question, “what’s your biggest challenge in landing new business?” many give the same answer. It isn’t other competing providers… most teams are willing to go toe-to-toe with their competition because they believe in their product. In reality, most suppliers say their biggest competitor is inaction – potential prospects who see the value in their offerings but never quite pull the trigger for any vague reason (or no reason).
Procurement needs a mentality change: The default should be change, not the status quo. Don’t push for reasons change is necessary, demand justification for why things should stay the same.
This goes beyond simple supplier selection. We won’t get anywhere new by traveling the same old road. The key is finding a new path forward instead. I’ve written before on topics of disrupting procurement:
- Procurement could cut Air & Gas spend marginally through three bids and a buy – or they could disrupt business as usual and remove the need for sourcing in the category altogether.
- Procurement could play hardball with photography studios for incremental decreases in rice – or they could continue disrupting things by shifting towards rendering.
How Procurement Can Move Forward
It’s one thing to describe how Procurement should become leaders of change management, and another to put a plan in place to do so. Below are a few steps we can take today to start down this path:
Establish relationships with category SMEs (and build SME within Procurement)
One of the biggest complaints spend owners have is that Procurement exists as a group of bean counters who don’t understand their specific needs. Marketing and IT spend owners notoriously write off Procurement intervention because we “don’t get it.”
Sitting down with these teams to better understand their goals, supplier relationships, headaches and processes gives two benefits:
- It helps Procurement build rapport, which is critical when proposing big changes. We need these groups to trust that Procurement not only understands their needs, but will move to support them (instead of disrupting them).
- It helps Procurement build credibility and in-house subject matter expertise. When Procurement can articulate the finer nuances of a spend category, it will be easier to build and convey plans for change.
Set a High-Level Goal
Every marathon is finished one step at a time, but you always need to know where the finish line is. For Procurement to elevate to this strategic level, we need to set goals beyond the tactical, day-to-day objectives.
- These goals will vary from team to team, but should have a few common denominators:
- They aren’t siloed in Procurement. We can’t shift our organizations if our activity is relegated to just our department. We need to build goals that impact the entire organization.
- They aren’t incremental. We aren’t looking to move the needle an inch; we want a sea change. To swipe a phrase from James Collins, we’re looking for big, hairy, audacious goals.
- They aren’t short-term. While we’ll certainly need to stage out subsets of tasks to accomplish each week, month and quarter, these goals need to be longer in terms of vision.
Develop Stages of Success
Even after building up rapport and subject matter expertise, other groups or organizations could be wary of proposed change. Even after gaining top-brass buy-in for our strategic goals, we’ll still need to sell it to different levels of our organizations.
The key here is plan for smaller, quick-win opportunities and grow from there into more involved changes with larger and larger rewards. We want to build momentum, showcasing the results of our wins and citing them as evidence we can take on bigger and more impactful changes moving forward.
Change Ain’t Easy
The best-laid plans here will come up against a lot of pressure. We’re asking our organizations to realign and consider risky “what ifs.” And, let’s face it, not every risk will be met with reward.
However, Procurement’s role as a center point for supplier relationships across the organization means we have our finger on the pulse of where supplier markets are moving. This, in turn, is critical intel our organizations will depend on when considering pivots to business as usual.
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Brian Seipel is a Consultant and the Spend Analysis Practice Lead at Source One, a Corcentric company. He is focused on helping companies implement innovative solutions for driving revenue and expanding market share through procurement and strategic sourcing best practices. With a background combining Business Analysis, Information Technology, and Marketing, Seipel played an instrumental role in developing the proprietary spend classification taxonomy and user experience for SpendConsultant. Seipel is also a featured contributor to thought leadership blogs including Sourcing Innovation and The Strategic Sourceror.