How to incorporate Procurement into your organization.

As Corporations place greater focus on spend management, procurement organizations are growing.  Category spend management is expanding and more unmanaged areas of spend are being targeted.

For managers unaccustomed to working with procurement, the burden of another internal group to manage can seem like a daunting task, but for savvy managers who know how to work with procurement, the support from procurement could be a welcomed relief.

In my time as a consultant, I have worked with countless organizations.  Some groups have been openly hostile and uninviting, while others have been warm and welcoming.

For those who resist the injection of procurement into their organizations, their dread is understandable.  The daily burdens of managing a department within large organizations is demanding enough without also having to subject your suppliers to another set of hurdles.  These sentiments are magnified when your procurement team is made up of external consultants.  Granting interlopers from another Company access to your department’s finances can make you feel intruded upon and their intentions can be suspect.

So how can you overcome these feelings and work more collaboratively with procurement?

Whether your procurement team is internal or external, there are three key practices that will help you and your organization integrate better with procurement and get the most value from your experience.

Number 1:  Support must come from above.

The number one reason why procurement initiatives fail is that management failed to lend meaningful support.  Management needs to provide clear and unequivocal endorsement of the procurement initiative.  Vague or ambiguous instructions confuse staff and engender hold-out employees bent on not doing anything until it is required. Management must also lend their credibility to the procurement team.  This means making warm introductions to key staff lauding the team’s strengths and promoting the partnership.  The manager must also devote resources to support the team.  With these outward expressions of support, the team is more likely to recognize the Company and their manager’s commitment thereby encouraging the teams commitment as well.

Number 2:  Strategic Vision.

Procurement is more than price solicitations and negotiations.  In order to get the greatest value from procurement, an organization must consider procurement a strategic function.  Simplified supply chains and just-in-time inventory models are just a few of the strategic initiatives that procurement can facilitate.  In construction, upfront prequalification of suppliers in emerging markets can pave the way for expansions and strategic Master Service Agreements can reduce time to procure and enhance quality with no increase to cost.  Organizations that realize the strategic power of procurement experience better integration and adoption of strategies while those that don’t, experience limited compliance and resentment from their staff.

Number 3: Embrace procurement rigor.

Everyone knows that proper planning is the best way to ensure success, but when soliciting quotes from vendors, this fact is often overlooked.  Last minute engagements and abbreviated procurement efforts result in missed opportunities and sloppy engagements.  The best way to avoid these missteps is to engage procurement as early as possible.  Early engagements allow procurement to apply the rigor of procurement without award delays.  Just as suppliers require time to gather data and prepare pricing, procurement requires time for critical tasks such as developing requests for proposals and perform supplier and market research.  Without these critical tasks mistakes will be made and the experience of working with procurement will be sure to fall flat.

Change is universally difficult.  The introduction of a procurement team where there was none is one of the most challenging changes to adopt, but incorporating a procurement team can add valuable depth and skill to your team.  Keep an open perspective and treat your new procurement team as an extension of your department.  Doing so will reward you with a fresh new approach which could pave the way for expansion or refresh existing relationships in a way you might not have imagined.

Tell me your thoughts.  Have you incorporated a procurement team into your organization?  Was it successful?  If so, what did you do to help promote their integration?  If it was not successful, why not?

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