Article: Dismantle Outdated Silos – Challenging Preconceptions of Procurement Starts on the Inside

Overview

Procurement is often seen as a back-office function that is responsible for buying goods and services. However, the last few years have shown the business world that procurement can play a much more strategic role in an organisation. But, for procurement to have a ‘seat at the table’ and be seen as driving real business value, it must challenge preconceptions and dismantle outdated silos.

This means building relationships with people in other departments, focusing on user-centric processes and managing the transition through effective communications. 

In our New Rules of Procurement Engagement series we are engaging with leading procurement thought leaders and practitioners, from global powerhouses to tech wizards, to gain insight into the changing landscape taking place in procurement. 

Following on from our previous article, how procurement is transforming from a ‘cost cutter’ to a strategic advisor, we now look at the need for procurement to challenge preconceptions and dismantle outdated silos to build strategic relationships within the organisation. And it starts on the inside!

Our New Rules Changemakers share three key areas that will help to change the perception of procurement from a back-office support function to a proactive, strategic resource.

Engage with stakeholders

Gone are the days of working in isolation. Procurement must build relationships with department ‘heads’ and buy-in from its internal customers is critical for procurement to manage this transition from a support function to a catalyst and enabler of positive change.

“You’ve got to constantly engage the business. It’s no good procurement once a year engaging the business, getting their objectives, going away to their Ivory Tower for a year and working on those initiatives in isolation. You’ve got to set up your own internal review panel, your own committee, again ideally for C-suite but if not heads of department, to regularly (by which I mean maybe quarterly) get together and just reevaluate what is important to each of those departments at this particular point in time.” Nick Drewe, Market Dojo

Effective stakeholder engagement stems from first understanding who you should be communicating with and building relationships with these people. Ask yourself, “who am I here to serve and how best can I do this?” Most procurement professionals will, at some point, have been on the receiving end of push-back and resistance to working with other departments. People can feel threatened by procurement’s intervention into their day-to-day purchasing activities and, at worst, may feel that there will be negative consequences for ‘letting procurement in’. This type of resistance can’t be ignored or underestimated. 

“People see the purchasing department as a support department not as an added-value department for the business. They see it as administrative, that we don’t have value and that they’ll lose time or power to go through the purchasing department.” Caroline Patricia Huberdeau, Leroy Merlin

Proactive procurement professionals know that they need to get off their seats, leave their offices, and for some, out of their comfort zones. That they must talk to people in other departments to truly understand people’s needs in terms of core/mandatory requirements versus not critical but potential value-add requirements. Armed with this information, or ‘needs analysis’, it can be aligned with the organisation’s needs which will ensure greater success of the project.

However, even when there is departmental and organisational alignment it can still be met with resistance. This is where communication comes in. And by that we mean more than saying “our analysis tells us this so here’s what we’re doing”. It’s about effectively communicating the value, the benefits and the subsequent wins of the project, not just from procurement’s point of view, but for the company as a whole. We’ll talk more on this later in the article.

Struggling to get stakeholder buy-in? Read our article Tactics to Convince Your Stakeholders to Run eAuctions

Focus on user-centric processes

User-centric processes focus on putting the user in the centre of the design. Procurement processes are no different to IT development processes or manufacturing processes. To many, process means technology but this is not the whole picture. Technology is a means to make things better, easier, more efficient for users when thought is first given to what users need and how they will use the tools. 

Important considerations are:

• What are the users’ goals?
• What are their pain points?
• Is the design clear and intuitive?
• How long does it take to complete each task in the process?
• Is the process efficient?
• Does the process meet the users’ needs?
• Does it help the user achieve their goals?

Optimal results will come when finance, engineering, product innovation, supply chain, procurement, and other key departments are involved in designing the process. This collaboration ensures the process is designed with all of the relevant considerations in mind.

It may be tempting to rely on technology and assume that it will solve all the problems. But technology should be an enabler, not the driving force. Identify first the desired result or outcome from a new process, then look at the solutions and tools available that can help to achieve this. Read how Imperial Brands took this approach to ensure successful digital transformation of its procurement processes.  

Finally, it is important to get feedback from users on a regular basis. This will help to ensure that the process is meeting the users’ needs and that it is working effectively. Frequent touchpoints and feedback will give visibility into how well the processes work day to day.

Connected communication is key 

Communication is key to so many areas of procurement’s activities, and as such is a common thread running through our Changemakers’ insights.

For procurement to move from the back-office and be seen by the rest of the organisation as a strategic function it requires a change in the way things have been done and in people’s mindsets. And, as with any change management programme, communication is key.

Gartner cite that “73% of change-affected employees report experiencing moderate to high stress levels, and those suffering from change-related stress perform 5% worse than the average employee. Effective change communications can counter these trends and support business transformation.”

“Change management is not easy work in the purchasing department, I would say that half of my time is dedicated to communication and influencing.” Caroline Patricia Huberdeau, Leroy Merlin

This sentiment is echoed across the industry. According to Ardent Partner’s latest CPO Rising 2023 report “Most CPOs that were interviewed said that they are trying to build a more collaborative culture and open communication within the sourcing team and with internal stakeholders/functions and strategic supply partners. They want their teams to work proactively to prioritise the development of stronger relations with critical suppliers.”

Consistent communication is needed to help stakeholders understand the value, benefits and the subsequent wins of any procurement project. And this requires time, effort and an effective process to be done properly. 

We asked our Changemakers for some practical tips to take communication to the next level. 

Changemaking Tips for Effective Communication

• Understand people’s preconceptions of procurement’s remit within the organisation, this will tell you where procurement is perceived on the administrative versus strategic spectrum i.e. how big a task you have on your hands.
• Address any fears that people may have for ‘letting procurement in’ for example, that their decisions will be questioned, relationships with suppliers threatened, or their job replaced through procurement’s involvement.
• Take people on the journey together in terms of why it’s important to the company and what it means for the future success of the organisation.
• Don’t let the ‘send’ button get stuck on! Make sure that you 1.) ask for, 2) receive, 3) listen to and, 4) act on feedback. People are more likely to support change if they feel their concerns are being heard.
• When they happen, celebrate the wins, and not just as a procurement department but as a collective group of people on the same mission.

“So it’s all about communication and letting people understand how we will work together and to make them part of the project. If they’re not part of the project, you will not be able to implement the project and the savings that you presented, so it’s really key.” Caroline Patricia Huberdeau, Leroy Merlin 

“Sometimes we are missing some really key negotiation just because they don’t feel at ease to work with purchasing or because they don’t want to feel that they’ll lose control, or we will judge the work if we find a lot of savings.” Caroline Patricia Huberdeau, Leroy Merlin 

“Another couple of points that are ‘keys’ to the change management process is to celebrate your successes, sometimes even small successes, both at a personal level and at a department or organisational level. That’s where tracking things like KPIs become so important because it gives you the data so that successes can be quantified, and tracked, and celebrated.” Canda Rozier, ex-CPO

So, how will you challenge preconceptions and dismantle outdated silos?

Get more insight into the New Rules and join the Changemakers!