May I vent? Let's change how we talk about procurement.

An image of four arrows pointed downwards and one illuminated arrow pointing upwards.

Shopping, buyers, shopping carts, savings, back office, JUST STOP DUMBING US DOWN!

As many of you know, my passion is to help elevate the sourcing industry to receive the attention, seat, respect (and yes, pay) that it deserves. So why do sourcing professionals keep self-sabotaging by using the term BUYER to describe ourselves? The only time this is a sexy title is perhaps if you are the buyer of fashion who attends runway shows and hobnobs with designers. Buying is what I do when I “shop,” like for groceries. We as sourcing professionals are NOT shopping.

So onto my next pet peeve, why do we have cute little icons that look like grocery carts to check out within our tools? Yes, it makes it seem like an easy process when pushing it out to our internal customers, but it connotes “shopping,” which, as we have just discussed, we are not doing. We are selecting items from a carefully sourced category after a lot of thoughtful processes have taken place. Why can’t we use an icon that better showcases the importance of this role?

Also, savings as a buzzword, not to mention as a way to describe the value sourcing professionals bring to the table, is “so last year.” For that matter, it is “so last decade.” Savings is not all we do. We improve service levels and quality, bring in value-added services, all while (generally) reducing total cost of ownership. But the real point is that we have the unique ability to impact not only bottom-line savings but also top-line growth. We have insight into all lines of business as they are making decisions, not in the rearview mirror. And, we have relationships with suppliers who are incented to bring innovation to us. If that is not enough, why not use Equivalent Revenue? That will get the attention of the CFO, CEO and Board. Take my very simple example. Let’s say:

Spend = $500 million
Savings/cost avoidance from sourcing efforts at 12% = $60 million
Net profit margin = 7.5%
Equivalent revenue to generate the same value from sourcing efforts = $800 million (or $60 million divided by 7.5%)

The amount of effort required by the company to generate $800 million in revenue is massive and clearly understood by all members of the C-suite. Therefore, reporting results in terms of “equivalent revenue” instead of “savings” positions the sourcing organization in a more impactful and powerful way. McDonald’s recently told me they report the number of hamburgers that need to be sold to achieve their revenue targets. Why not show the impact the sourcing organization has on the company and STOP using savings as our barometer for measurement? While you would assume that others will make this calculation and realize this is the case, they don’t, or can’t make the analogy to give us the credit we deserve. We must step up and change the dialogue to get the respect we have earned. 

My last rant for today is the term back office. Listen people, we are NOT back office! Yes, it is true that we are not customer-facing, but we impact every aspect of the customer-facing goods and services we deliver. I like Phil Fersht’s One Office concept. From the perspective of the customer, we are just one office.  If we keep acting like we are simply a cost center, we will be replaced or outsourced. We need to think of and represent ourselves as the strategic partner to the business units that we are. We see redundancy, stupidity and waste as it happens across the entire company. We can control this through our sourcing initiatives and we can change the results of financial recording in real time—we don’t need to wait for published financial statements to recommend impactful change. We know when and where the waste is happening, which makes us just as strategic to the business as the office of the CFO, so why don’t we start acting like it? 

#EndRant

 

Dawn Tiura, President and CEO, SIG

Dawn Tiura is the CEO and President of SIG, SIG University and Outsource and has over 26 years' leadership experience, with the past 22 years focused on the sourcing and outsourcing industry. In 2007, Dawn joined SIG as CEO, but has been active in SIG as a speaker and trusted advisor since 1999, bringing the latest developments in sourcing and outsourcing to SIG members. Prior to joining SIG, Dawn held leadership positions as CEO of Denali Group and before that as a partner in a CPA firm. Dawn is actively involved on a number of boards promoting civic, health and children's issues in the Jacksonville, Florida area. Dawn is a licensed CPA and has a BA from the University of Michigan and an MS in taxation from Golden Gate University. Dawn brings to SIG a culture of brainstorming and internal innovation.