Webinar Notes: Three Foundations for Best Practice Procurement
These webinar notes are from a November 5th event co-presented by Peter Smith from Spend Matters UK/EU and Daniel Ball from Wax Digital. The webinar is available on demand on Wax Digital’s site.
Peter Smith opened this event by offering up a powerful statistic from Wax Digital's own research: when asked, 44% of procurement teams said they have a close working relationship with the business. Unfortunately, only 18% of those business stakeholders agree. This amounts to a 25% ‘relationship leakage’ – or as Smith said in the event, self delusional procurement organizations. And that doesn't even touch on the 56% of procurement teams that DON'T think they have good relationships with stakeholders...
The idea of this event was to look at multiple kinds of integration that procurement has responsibility for. When Smith talked about the three models for procurement (see below), the focus was decidedly on information and communications flows rather than data and technology. In my opinion, that is fantastic because it expands the role and potential impact of procurement through our understanding of our own way of working.
Smith's three procurement models:
- Faithful servant (administrative)
- Gatekeeper (old school)
- 3-way integration (preferred)
The differences between these three models are predominantly based on whether procurement serves as a ‘door’ or a ‘window’ to progress. Rather than being an actual goal, how procurement interacts wish stakeholders and suppliers (or stakeholders and suppliers) is symptomatic of their attitude towards collaboration and value creation and closely tied to the cap on their potential impact. Being sidelined or serving as a blocker between procurement’s two primary contacts points ultimately leads to a more administrative, weaker procurement function.
The ultimate goal is not to make significant changes to the procurement organization but for procurement to lead changes in the enterprise. As Ball put it, we don't need a procurement transformation - we need a procurement-led transformation of the business.
After all, as Smith accurately pointed out, while procurement can negotiate savings, it is the budget holders that have the ultimate power to realize savings because they are the ones making the spend/no spend decisions. This puts procurement in a position where we need to share both success and failure with the rest of the organization. To make such an arrangement work, we have to heed Smith's advice about communicating with stakeholders and suppliers in a way that makes clear what is in it for them - build compliance rather than fighting maverick spend.
But the integration discussion was not all ‘soft’ – in fact, two of the three questions addressed in the Q&A were about traditional technology integration: How can you tell if a solution is really integrated or just looks good? and Is the Cloud all hype? The third question was better aligned with the overall message of the webinar: How can procurement professionals reconcile the multiple roles we need to fill with just one of the three procurement models? Of course, the answer to that is not cut and dry.
Procurement will always need to be changing parts admin, ‘bad guy,’ and facilitator. The key for strategic teams and individuals is knowing when to take on each role, how to manage the role that fills the majority of our time, and which one we are most often associated with. Perhaps integrating procurement’s multiple objectives is the greatest challenge of all.