The case for procurement: More than just cost saving

The case for procurement: More than just cost saving

George Painter Blog, Procurement

Pub conversations. Brilliant and fun or boring and awkward. We’ve all been there with friends we know and strangers we don’t. There can be a chance to talk about almost anything, and if we’re frank, a chance to talk much more candidly about whatever it is that we want. Indeed, we apply this even when we start to talk about work.

But what has this got to do with procurement? Well, a recent conversation with a friend of mine, working in recruitment, has left a lasting impression on me. We were loosely chatting about how we’re both doing at work and I began to talk about a particular project I’m working on. As soon as I opened up about a potential hurdle I’m expecting, he cut me off: “Well all you really do is make something cheaper in the short term, you don’t really think about adding value in the long term.”

We both smiled and laughed, but instantly I felt the need to jump to my own defence at his negative outlook. It was a view that, in my opinion, overlooked so many aspects of what we do. I reacted by trying to run through every project I had been a part of, explaining the value we can add and the evaluation criteria that allow us to look beyond simply the cost.

But did I change his perception? In isolation I think I may convinced him on a project by project basis, however sadly, I doubt it was enough to persuade him to hold procurement in higher esteem. Clearly, this conception of procurement is quite engrained. I have been in meetings where comments made suggest I am only involved to find the cheapest solution. I recall a supplier presentation where I felt I had to prove myself to the wider team, ensuring they saw my genuine interest in identifying the best ‘value’, not just the best ‘cost’ solution.

So, what does this mean going forward? How do we improve the general business view of procurement? How do we change a business-wide mindset?

Of course it is important to accept that savings are an important part of procurement; ultimately, we would all be out of a job if a company never looked for ways to save money, but I firmly believe we look beyond this impression of cheapest is best. We do pose the question of “What is the vision?”. We do work with stakeholders to find the right supplier that will benefit the long-term position. We do work closely with department heads, to understand exactly what they hope to achieve, to support them and deliver on this journey.

I’m not naïve enough to suggest we can deliver on all their requests, but the key to early involvement means we can work together, streamlining what is then possible and ensuring that stakeholders and budget-holders are kept equally as happy. Therefore, this model of collaboration is key to resolving negative preconceptions.

While procurement will always be linked with and driven by budgets, we must be prepared to work with all departments within the business, outline our support and understand the gripes stakeholders may face. We must have understood where the need lies, and then work on a path to improve that position. Business departments also need to be prepared to work with procurement to maximise the potential outcome. The ideal procurement function would partner with the wider business, giving advice that helps avoid problems, helping create flexible contracts that can change with growth, supporting to address issues with suppliers, ensuring suppliers are performing well, and focusing on maximising value (rather than just minimising cost).

We should be asking ourselves these questions regularly; “Are you in line with what your stakeholders expect from you?”; “Are you just pushing an easy ‘here and now’ solution?”; And perhaps the most important of all; “Are you listening?” Only then, will procurement be able to shake the stigma and be seen to offer so much more than cost saving.