Using Procurement to Drive Transformational Change

Posted on 10th July 2019

Businesses often undervalue procurement. They see it as a process-driven blocker which managers will do their utmost to circumvent, rather than a strategic partner that can add value to a business. Saving money, improving efficiency, encouraging innovation and enhancing communication are all benefits of a well-thought-out procurement process. But, how does procurement move from being perceived as a naysayer to become a driver of transformational change?

Hire the right procurement staff

If you want your company to take procurement seriously, then the person leading the team should be a strategic thinker who can communicate how procurement can benefit the business in the long term. Someone who can offer alternatives to 'no' and whose aim is to achieve the best result for each procurement.

The ability to see the bigger picture and encourage the procurement of goods and services multiple departments or people can use is also desirable. The person should also be an effective change manager as they will ensure people implement and use what they have purchased. Their success should be measured by whether the benefits of the purchase are realised and the change is a success.

Align procurement strategy with overall business strategy

Procurement has a significant role to play in overall business strategy as it touches every area. Transformational procurement can:

•            Reduce costs

•            Improve financial controls

•            Improve productivity

•            Manage risks

•            Drive effective processes

•            Encourage innovation and collaboration

To integrate procurement into the strategic direction of your company, it should have board representation and be involved in significant purchasing decisions from the start. At this level, procurement should understand who your company's key suppliers are, identify the risks that arise from the relationship and manage them appropriately.

Your procurement staff should understand strategic priorities and goals and be able to make procurement decisions which support them. For example, if your strategy is to reduce costs, then your procurement team should encourage recycling of products between departments where possible, instead of buying new items. It may be worthwhile employing someone with a professional qualification in procurement to complement their practical experience.    

Your procurement staff should also integrate with your business and help it move away from a silo mentality. Improving communication will increase the chances of successful change implementation. For example, when your staff understand how a new piece of software aligns with business goals and the value it will add, you’ll see a considerable increase in user acceptance.

Let your procurement team get innovative

You're missing a trick if you overlook the role procurement can have in innovation within your business. They're in the perfect position to champion it by identifying and building relationships with your key suppliers who can contribute new ideas and innovations. As part of the research they carry out pre-purchase they can also monitor competitors, their network and the broader market for new developments that could benefit your company.

Use procurement technology to add value to your business

Procurement technology will allow your procurement staff to automate the transactional elements of the process. For example, pipeline management software automates business case approval and sends automatic email alerts as you progress through the approval process. Tender management software provides templates with the same pre-loaded questions and documents for all suppliers. It also auto-generates a timeline of tasks that need to be completed. Contract management software automatically tells you when each of your supplier contracts is due for renewal so you can either renew or go out to tender again. Finally, supplier relationship management software will automate risk management activity and generate management reports from pre-defined criteria.

Meanwhile, your procurement professionals can concentrate on managing significant procurement projects and developing key supplier relationships. Procurement is all about relationship building, and if your team is communicating change effectively, they are also driving successful transformational change.

Atamis is a leading UK procurement software provider. If you’re interested in finding out more about how procurement software can benefit your business, we’d be happy to help.

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