Proving Procurement’s Value: What? How?

Categories : Procurement Goals | Improve Credibility | Set Strategy Published on : Mar 30 2018

By: ProcurementIQ Staff Writer, Ashley McKay

This topic is a common one; one that procurement should consistently revisit. We all know that proving the department’s value is something procurement struggles with on a daily basis – no matter how large or small or innovative the organization is. When internal customer’s think of procurement, they think cost savings and nothing else. After all, when you look up the definition of ‘procurement’, you find: the action of obtaining or procuring something. Sounds so simple, but it’s so much more than that. No wonder internal customers don’t realize the true value that strategic purchasing can bring to the entire organization. Here are just a few:

  • Risk Mitigation

  • Contributing to ROI

  • Achievement of Overall Company Goals

  • Fostering Internal Communication Between Departments

  • (And, of course, our favorite) Cost Savings



What Else Can Procurement Do?

In a guest post on Spend Matters (3 Ways For Procurement to Prove Its Value (Other Than Cost Savings!)), author Dustin Cochran, director of member development at Corporate United, highlights 3 overlooked areas that procurement can also help contribute to:

  1. Revenue Generation

  2. Operational Efficiency

  3. Retaining Top Talent


In what ways? There are actually several ways procurement contributes to the organization and the success of other department that many of us don’t take into consideration. (1) Revenue Generation: While we usually associate revenue with sales, “There are many ways that procurement teams support the sales teams and revenue generation by negotiating great rates on what sales teams need to be successful in their roles. For example, by negotiating the best programs for travel services, such as car rental and travel management, procurement can help ensure that sales representatives can get to their meetings without issue, while saving the company money on travel expenses.” (2) Operational Efficiency: “This is likely the area where procurement is seen as best aligned. Continuing to be a steward of cost effectiveness, risk mitigation and lean methodologies is essential. Most business units would love to utilize these skill sets, but many don’t think of procurement when the need arises.”

For full insight from Dustin and to learn how procurement helps retain top talent, click here.

How Do You Get Stakeholders on Board?

Take some tips from our guest author and owner of Buyer’s Meeting, Kelly Barner:

  • Company-Wide: Kelly recommends starting here. It’s obviously beneficial when executives are on board and the messaging is coming from the top-down. If executives see the value, then internal customers will be more likely to want to work with procurement. “This will not only increase the rate at which the ‘all new procurement’ is embraced by the rest of the company, it will reinforce the messaging by providing a reason for the changes – making clear that they are driven by procurement’s capabilities and the organization’s needs rather than just procurement’s ambition.”

  • Functional: Because the strategies and priorities from department to department will differ, procurement may also have to create special messaging to make their goals are in alignment with each department. “If this message is delivered effectively to finance, marketing, operations, et al procurement will see their efforts turn into results in the form of healthy relationships with other departments.”

  • Individual: Procurement isn’t off the hook. To change the way other departments look at them, they will have to learn how to communicate their brand appropriately. “..,If procurement wants to overcome a lowest-cost image, even a carefully crafted message needs to be delivered personably. Credibility will be built with in-house stakeholders one at a time based on individual, meaningful conversations.”

 

For more on how on proving value, read
“Beyond Cost-Savings: Proving Procurement’s Worth”



More from Procurement Insider

  • Articles & Insights

Why Active Listening is Critical for Procurement

  • Improve Credibility , Communication Skills, Negotiation Skills, Stakeholder Engagement
  • Best Practices & Case Studies

5 Tips: Say This, Not That to Build Trust in Procurement

  • Improve Credibility , Assess Opportunity , Stakeholder Management, Stakeholder Relationships, Credibility, Trust
  • Articles & Insights

Skills to Hone in On as Procurement Goes Digital

  • Improve Credibility , Digital Transformation, Big Data, Analytics, Technology
  • Articles & Insights

Stakeholder Engagement: How to Measure & Improve

  • Improve Credibility , Implement & Measure , Stakeholder Management, Stakeholder Engagement