Ten Things to Do to Improve Procurement
Here are ten things you can do to improve procurement in your organization and make a difference to the contribution you are making to your business.
Let go of Purchasing
When we’re watching purchasing teams try to develop high quality Category Strategies, one of the hardest parts appears to be to grasping the opportunities which exist outside of purchasing’s immediate area of influence – pricing. In reality, a great category strategy will draw together approaches from across the organization, to build into a solution embracing many aspects linked to the acquisition and use of that product or service. This often means letting go of purchasing as a focus, and instead taking a far broader business approach.
Go deep in one area
Category Management is a large subject area and we need to have good knowledge of how a particular part of the overall process works to get the best from it. However, there is a tendency to hold only superficial knowledge in any specific area. So, for 2014, pick a part of Category Management and really understand it deeply. Read around the subject, expand your understanding of how it works and how it might apply to key categories in your area, and then seek to both apply your knowledge and help others develop the same depth of understanding.
Prepare a negotiation
Our broader experience of negotiation suggests that there is generally a lack of preparation for negotiations, leading to unseen but notable under-delivery. With a high level of preparation, the greatest level of success can be achieved, and finding a systematic way to plan, including getting stakeholders on board, using messaging correctly, understanding completely what is being negotiated is an essential step on the way to doing that.
Get quality feedback
In negotiations, and in sourcing strategies, our opportunities to learn and improve are considerable, but we need to make sure we can access a voice we both trust and respect to provide that feedback (and the individual must be in a position to know what we’re doing). As such, this requires us to own the responsibility for making that feedback, and then taking on board the commentary and information provided. This all takes planning to make it work, but the rewards are significant.
Most supply chains have waste built in almost by default: training courses where there is no requirement for application; consultants’ reports which are ignored; products which have low conversion rate into something our own customer will buy; capital acquisitions which never pay back as expected. Each provides a risk source of opportunity, and building a waste reduction program into every category strategy is a sure fire way to optimise returns on that strategy.
Create great quality output
Develop insights and outputs that make people go ‘Wow!’ Not everything, but look for areas and opportunities in which you can add an added extra twist that makes people really appreciate the work you’re doing. It’ll be noticed.
Don’t be blinded by price
In our purchasing world, in which the nonsense of PPV is the only measure that matters, we can be driven onto the rocky shore of price as the only thing that matters. Start the fight back here to get recognition for all the contribution which can be made by a great category strategy. This is no small task, but a journey of a thousand miles starts with the first step..
The very nature of Category Management means that we need to communicate with a broad range of people; to do this effectively, we need to plan messages, timings and recipients (possibly not in that order). Doing this well takes thought and practice. Finding a moment during the day to think about the communications which will be needed over the next week, and the materials and messages needed to support those communications pays dividends in getting people on board with the direction you want to go. And, of course, this improves delivery success significantly.
Lots of conditioning
Make sure you are managing the flow of messages to suppliers, both in category management activity and particularly within negotiations. We never do anything like enough to condition suppliers (have a look at your reception area as a test), so picking this area up and making it work positively for us will be a great way forwards.
Capture your Strategy
If you walked in to a new role and there was a sourcing strategy already available to work from and update, your day-to-day activity would be different. But there isn’t one, because your predecessor didn’t get around to writing one. So, for 2014, be different: leave a legacy, explaining what is going on in your category, so that others can accelerate their own contribution. Over time, the organization will build up a comprehensive library of approaches and strategies, allowing a change in focus for the organization to gain value from its supply chains.
Written by Mark Hubbard for Positive Purchasing Ltd
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