4C Associates’ Mark Ellis examines how procurement can reap the benefits of joining forces with other functions within the enterprise.
When it comes to driving and extracting value within an enterprise, much is made of the need for procurement to work more closely, collaborating and partnering with key suppliers. However, there are many examples of organisations which have invested in their external relationships in a bid to increase efficiency, drive innovation and reduce total costs. Therefore, the same three goals can be achieved through better internal collaboration.
Encouraging people and teams to align strategies, business objectives, use the same workplace solutions and simply communicate more frequently, are all ways to lift a business’ performance. In addition, many suppliers are under increasing cost pressure, meaning the level of savings available through negotiations is limited. In this article, I consider three ways procurement can drive and benefit from increased internal collaboration within your enterprise.
- Technology as an enabler
Technological advances have made it much easier for teams to share ideas and insights. Cloud computing, social media channels, share points, portals, Wikis and live streaming are just a few examples of inexpensive solutions available today. Procurement can use this technology to make vast amounts of data available to the rest of the enterprise. Sharing insights such as transaction data from suppliers and customers is not only useful information for the rest of the organisation, but also helps publicize procurement’s achievements.
There is also scope for procurement to design in-house purchase processes in tandem with regular users. This type of collaboration will not only reduce purchasing errors, but also minimise the level of resources procurement needs to dedicate to regular purchases. Additionally, this type of collaboration produces harmonised, effective and efficient E2E processes, which is of great benefit to the whole enterprise.
When it comes to collaborative technology a key principle is universal accessibility. Everyone should be given access to the chosen solution, regardless of their title, team or location. Ensuring everyone is able to contribute freely results in a transparent process, which encourages ideas and fosters collaboration.
Of course, while technology has the potential to bring people together, it will only be effective in businesses where a culture of collaboration already exists. Simply rolling out a new solution for everyone to use will not have an impact if there is no strategy around fostering collaboration. Business leaders have a responsibility to back and drive the process.
- Pulling in the same direction
One company which has leveraged the power of internal collaboration is Whitbread. The organisation’s long-term vision is to implement a circular economy business model, which would drastically reduce waste and cost. In order to achieve this goal the company has focussed on aligning objectives across the business and encouraging internal teams to work together.
Speaking to environmental website edie, Barry Edwards, Procurement Manager for Energy, Waste and Corporate Services, explained that the strategy was proving successful. He pointed to fruitful collaborations between the procurement and CSR teams, two functions which have significant overlap in terms of their objectives.
According to Edwards: “[…] Doing the right thing for the environment is usually the most cost effective solution.” The relationship between the two teams has led to a significant proportion of the waste generated being converted into biofuel. Another process sees the cardboard and coffee waste from Costa being turned into carpeting for Premier Inns.
The company has found that the falling costs of recycling and anaerobic digestion plants means this initiative is both cost efficient and environmentally friendly. Internal collaboration was pivotal to getting the project off the ground and the company is now reaping the twin benefits of lower costs and more sustainable business practices.
- A collaborative mind-set
Aligning objectives across a business means procurement can better work with internal stakeholders to create a more holistic sourcing strategy. A more joined up process also helps uncover mutually beneficial process improvements within the business. This type of insight is vital in an environment where external suppliers have been put under increased cost pressure.
One company in the Water Utility sector, has driven a collaborative approach across its own enterprise and challenged its own thinking prior to working on the latest AMP programme. This has produced an innovation solution which has not been seen in the market before and has fashioned a strong partnership with several other organisations to deliver the new programme.
With yet more uncertainty in the horizon, no business function should consider doing it alone – especially one as central as procurement. In the same way that leading procurement departments have sought to leverage supplier relationships to drive innovation, there should be a focus on replicating this internally. For many organisations better internal collaboration is the key to unlock the next level of savings, better ways of working and a more productive enterprise.