Authored by Donald Raack
As procurement professionals, we continually need to be able to sell our value. The value proposition of a world-class procurement organization goes beyond placing purchase orders and negotiating pieces prices at discounts. Today’s CPO is tasked with measuring procurement’s value contribution to the company in addition to whether the procurement team actually pays for itself. Selling procurement’s value to the company cannot be done as a one-size-fits-all approach.
As today’s trending discipline of Supplier Management becomes more prevalent in procurement teams, it is more important than ever the CPO ensures the procurement team understands the voices their customers (stakeholders). Those voices are not always the same, and will vary by industry and by function inside the company. Cost savings are typically the most important measure in a mature industry, whereas cost savings are minimally important to high-growth and tech companies which are more interested in speed of supply to decrease time to market. Regulated industries focus on supply risk mitigation. And when it comes down to individuals, have you ever listened to an engineer and an accountant debate what the value of procurement is?
Procurement may define its value to a company by tailoring its expertise to align with the goals and objectives of its key stakeholders. Establishing a council of key stakeholders as an “advisory board” to procurement can aid development of an integrated, strategic roadmap with benefits crossing functions. Integrating stakeholders into procurement policy development and sourcing strategies creates the best chance for procurement to earn its mark as a trusted, strategic function in the company. With continued development of stakeholder alignment, procurement has the opportunity to become a competitive advantage for the company.