4 Reasons why your procurement function does not deserve a seat at the top

By: Mediacy Mudekwa

How many times have you heard procurement professionals at a conference or in a random discussion say, "we deserve a seat at the table"? I've lost count of the number of articles I've read recently on the theme of why procurement "deserves" a seat at the top table. Fact of the matter is, procurement should be a strategic function. So why do procurement professionals struggle to justify why they deserve a seat at the top?

4 Reasons why your procurement function does not deserve a seat at the top

How many times have you heard procurement professionals at a conference or in a random discussion say, "we deserve a seat at the table"? I've lost count of the number of articles I've read recently on the theme of why procurement "deserves" a seat at the top table. Fact of the matter is, procurement should be a strategic function. So why do procurement professionals struggle to justify why they deserve a seat at the top?

The only way to answer this question is to look at it the reverse way and consider general reasons and behaviour that make some procurement functions fail the test to occupy a seat at the top

Reason One: Too much focus on savings

Many procurement functions put large savings numbers 'up in lights' when contracts are signed. However, organisations focused on procurement-generated savings may miss equally important outcomes such as enabling process efficiencies, category management and risk management. In many government and commercial organisations, procurement has become recognised as a fundamental enabler of business strategy and a preferred method for achieving sustainable growth. While good strategic-level procurement can enable organisations both public and private to achieve sustainable cost savings, the value of the procurement function of an organisation should not be measured purely through the potential of cost savings. Looking solely at procurement-generated savings estimates may shift the organisation's focus away from other equally important outcomes like meeting the core business and organisational needs (fit for purpose procurement) and thereby limiting your chances of getting a seat at the top. Bottom line: Rethink the way you look at savings and become a visionary, big picture professional

Reason Two: "I couldn't negotiate a better deal, because the business needed it urgently"

Procurement function's job is to work with business unit ahead of time, in order to manage last minute demands. There are numerous ways of managing this issue, from contingency stock to framework agreements with a pool of vendors that should always allow you to meet short notice demand without exposing you to a vendor that will exploit your need for speed with an unreasonable price. A procurement function that deserves a seat at the top table has gained this understanding in advance and uses analytical assessment to understand why certain items may be required urgently and the frequency with which these items are required. So set up an effective "Urgent Procurement Situation Policy." This policy should set out the requirements for your organisation to ensure that appropriate management and governance practices are in place for the procurement of goods and services under an urgent order. Bottom line: Never compromise process because of an urgent procurement demand!

Reason Three: Failure to bury the Chief Procurement Officer

Procurement deserves a new boss: Chief Value Officer. The reality is that "Chief Procurement Officer" is no longer an accurate reflection of the job's responsibilities. CPOs do more now than ever and someone needs to be in charge of value. If you need that seat at the top, your procurement function should consider value as being relative to your financial business case. We have now entered a new era of volatility and economic instability. Business objectives are no longer just about mass production. Long-term bottom-line efficiency and value are key to creating a sustainable advantage. In 2016, procurement was focused almost squarely on cost containment. But now how do you elevate your role to that of a trusted value contributor and business advisor in the context of improving agility and business performance? Demand value from your team, and not just volume. The question is: "What department do you think demonstrate more traits of a successful CVO than procurement? Bottom line: Bury the Chief Procurement Officer and create the Chief Value Officer!

Reason Four: Less focus on skills development

Let me give you a brief update of where we are today as a country. The headwinds confronting the South African economy are such that they might be better characterised as an economic perfect storm. South Africa was rocked by news that it has slipped into a recession after its gross domestic product (GDP) declined 0.7% during Q1 2017. Until recently, however, procurement was seen as a necessity and a transactional corner only. In fact, in many developing economies the profession is still being treated as a 'back-office' function and not much has been done to explore and address challenges facing procurement professionals in developing economies. I believe that exceptional economies are driven by exceptional people. However, in a recent CIPS Hays Salary Survey, 48% of those surveyed reported that they struggled to recruit the right talent in procurement staff in the last 12 months. There should definitely be a renewed effort to up skill procurement teams, not just for them to understand their core functions, but also for them to be able to examine the critical role played by the procurement in business and in regaining control of the economy while realising government's top agenda of inclusive growth and transformation. Bottom line: Limited recognition and less focus on skills development for procurement teams affects influence and confidence in professionals to drive strategic goals and thereby minimising their chance to get a seat at the table

The six competencies of a strategic procurement professional

  • Functional expert: has knowledge of processes and products

  • Influencer: relates to people, builds relationships, effectively presents arguments

  • Results seeker: meets deadlines, identifies actions, achieves goals

  • Innovator: thinks creatively, anticipates changes, produces solutions

  • Adaptor: stays calm under pressure and handles criticism well

  • Complier: Sticks to legislation frameworks, follows procedures and encourages others to as well

Integrated Procurement and finance model- image by Bravo Solutions

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