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Unleashing the Power of Procurement
By Donald Lee, Director of Strategic Sourcing, MDC Partners, Inc. [NasdaqGS:MDCA]
I am a procurement guy going on 16 years, and I don’t always understand why everyone is not as excited as I am about spreadsheets, vendor analysis, understanding the supply chain and bench marking. Procurement is cooler than a polar bear’s toe nail, and yet, we are often misunderstood.
Our purpose is to keep our companies safe. Our goal is understanding our businesses’ pain points from last year and vision for this year. Our focus is to add value and be a partner. But this simple truth gets lost somewhere.
Whether you call it strategic sourcing, procurement or purchasing, the theme is consistent. We engage in goods and services with the intent to leverage volume, reduce the total costs of ownership and maximize value for our stakeholders. For the purpose of this discussion, let’s call it procurement, as we look at what’s holding us back and how to unleash procurement’s power and impact.
Procurement too often is a Gauntlet.
Procurement is a place where only the strategic survive and all others become regulated to a tactical purgatory. The basic definition of procurement should be the gateway to building a relationship with stakeholders. But in many cases, we are running in a gauntlet. Rather than adding value, we are trapped in a triangle with the vendor, stakeholder and procurement each pulling in a different direction. The remedy is communication, inclusion, and partnership.
Put Trust in Procurement.
If the objective is not shared among stakeholders, vendors and procurement, the perceived success and results will vary. A stakeholder is left wanting for more, or a vendor is left feeling taken advantage of. This starts the path to procurement purgatory, because when procurement and stakeholders don’t trust each other, the vendor and stakeholder will meet and make deals without procurement.
I learned early on that just being the procurement person is not good enough. After a while, you cannot get water from a stone, and our value and ROI come into question. This is why we must prove we are trustworthy and more than “just that procurement person.”
Use Procurement to Bridge the Divide.
I was 11 years into my procurement journey when I started to support marketing and advertising. I asked a CMO, “How do you know if a campaign is executed right?” He tapped his chest over his heart and said, “I can feel it here.” An hour later I asked his media person the same question, and she pulled up an excel spreadsheet showing calculations measuring the efficiency of the execution of an ad campaign. There was a clear disconnect between the strategy and the implementation folks.
Procurement is a place where only the strategic survive and all others become regulated to a tactical purgatory
This was not a new discovery, as I have noticed it in other categories. What this insight gave me was validation of the process I had been working on for years as a procurement professional. I call it “stakeholder whisperer,” which is the process of breaking the mold and building consensus for what everyone expects from procurement. It is doing what is best for the business and all its different stakeholders.
Allow Procurement to Add Value.
I cannot recall how many times I have been asked to gather requirements for a RFP, route a document for sign-off and align significantly different edits from the manager, director and VP. When I pushed for clarity, it was always a default to the VP’s edits.
This is an opportunity for procurement to add value. In this situation, instead of just blindly accepting the edits, procurement can have individual conversations with the VP, director and manager to understand what they need and want. We can help bridge the gaps to ensure the end users’ needs are in alignment with the VP’s strategy. For this process to work, both sides have a shared responsibility to nurture their partnership as they focus on a common goal. Once this is established, procurement’s opportunity to add value exceeds consolidated purchasing power and lowers the total cost of ownership.
The Work of Procurement is Exciting.
Today, I manage information technology, while supporting advertising technology and marketing technology. The processes to support these categories are similar, with a few modifications and upgrades.
An exciting part of these categories is the innovation, how quickly things evolve, and the amount of disruption you need to factor into your exit clauses. I respect my IT counterparts as subject matter experts in the field, and I expect them to challenge me to stay current. This allows me to be the expert of the process, and to add value by being empathetic and able to communicate about what challenges keep them up at night.
Through Partnership, Procurement Makes the Improbable Possible.
For procurement to add greater value, first we need to be included in the conversation. But that’s just cost of entry. Most procurement folks want an opportunity to do more than costs optimization on goods and services.
A previous job told me, “Procurement never says NO, instead you figure out how to make it happen.” This notion of making the improbable possible is good if it helps us push each other outside our comfort zones and toward a meaningful strategic goal.
But there must be a partnership, and of course this is developed over time. If partnership is established, we are empowered to say no, to evaluate when something is not a good use of time, or to assess when the ROI doesn’t justify the use of resources. This is where procurement adds value, because it allows us to bridge gaps, flush out details and provide critical feedback from end users and research.
Let’s Create Great Procurement Moments.
We have earned a right to be at the table. Most procurement people want to be disruptive and innovative. If we are challenged to unleash our true value, ROI will surge. Because great procurement moments are good for business. This is our time.