Pity the poor… Procurement Department

"Not likely!?" I hear most of you say. Many professional advisers can cite tales of aggressive procurement people, wheeled into deals at the last minute with the sole mission of ignoring or denying value, in order to drive down price. Why the sympathy?

Well, one element of Living Sales^® is about seeing things from the other side and HuthwaiteFleming's latest research project did just that. We were interested in why those tales persist when modern procurement strategies often talk grandly of "synergistic long-term relationships with key suppliers" and "intimate partnerships based on mutual value propositions".

In conjunction with Bradford University School of Management, we undertook research with procurement professionals, but – as ever with HuthwaiteFleming – we wanted to know what goes on in their 'real world'.

We interviewed, in-depth, over 120 senior or director-level procurement professionals across Europe, USA and as far afield as New Zealand. We found that procurement was indeed being asked to evolve into a strategic function and live out those grandly stated visions.

However, even where they are given a Board-level mandate to do so, common obstacles prevent most of them from executing it effectively.

One problem is that internal stakeholders do not sufficiently value, recognise or acknowledge the role of procurement, despite its increasing profile. This results in low corporate 'buy-in' to the procurement strategy and precisely the opposite of what it is designed to achieve.

Procurement professionals need early involvement in potential deals. This helps them develop a clear understanding of the importance of the sellers' solution and the value it will deliver in relation to its cost. However, they find themselves excluded until the latter stages. At this point, the only value they can add is to see if final cost savings can be extracted for their organisation – hardly a strategic role. And no wonder the seller feels like 'just another supplier', however critical and specialised their solution might be.

So what's the message? Well, if the strategic role of procurement as a contributor to corporate performance is here to stay, we believe that there is a message for both sides.

The message for procurement is that, as well as external skills (for example, negotiating with their professional advisers) they need a range of internal skills. The research so far suggests that in order to fulfil the role set for them they need to become skilled internal consultants, able to influence and persuade their stakeholder colleagues and show how their objectives are congruent.

Just laying down procurement policy unilaterally, encourages the latter to ignore it until the last possible moment. We at HuthwaiteFleming know a lot about influence and persuasion, so the next stage of the research will be to try to identify exactly how we might be able to help in this.

The message for professional advisers is that – unless you are absolutely sure that your potential sale will avoid the attentions of procurement – build relationships with them early, even if your end-user buyer is sceptical. This will help develop that understanding of value that is so important to protect your fee income.

If you treat the procurement function like an enemy, don't be surprised if they act like one.

Whether you are a professional in the field of procurement or a professional adviser, if you want to know more about the research project, why not download the Executive Summary and gain an insight into the research findings...