Profit from Procurement. Jose Oliveira Valentede
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developing their own ambition in line with those. But it doesn't even stop there.
Because Procurement has to work cross-functionally, it will need significant time and input from other functions to achieve its ambition; in particular, through requirements definition, signing off on key decisions, and providing the mandate which Procurement requires in discussions with the supply base. So, it must also secure this commitment up front from other functions too.
As we are finding, getting buy-in is not just getting an empty nod from peers for an ambition. It is about identifying the people who will be required to help Procurement achieve it, to ensure it aligns with the priorities of those people and functions, and then to secure the commitment of those people to give the time and input required throughout the journey.
This is an incredibly difficult thing to do in most businesses, especially more complex ones, and requires a high level of leadership, empathy, and networking from the CPO. We talk in more detail about these skills in Chapter 4: People. But this step is so vitally important because without buy-in, Procurement can set any ambition it likes but will never get anywhere close to achieving it.
Achieving Your Ambition: Customer Focus
Being customer focused, whether in Procurement or elsewhere, is not a new concept. It is one of those elements that when you get it right, everything else flows from it. In the end, we all exist to serve our customers, whoever they are.
If we don't have customers—people who benefit from our work and service—we won't be around for very long. They are the ones who pay our bills (directly or indirectly), who shape our approach, and who need to be kept satisfied as much as possible. But this basic concept is so often overlooked, and especially in Procurement. How many times have you looked at your Procurement function and wondered who they think they are serving, and how happy those people are with what Procurement is doing?
Procurement has historically been internally focused, but some leading functions have oriented themselves much more towards the customer recently. Despite that, in many companies, Procurement still creates processes that its customers—i.e., anyone else in the business who is trying to buy something—loathe and try to avoid. If it does any performance measurement, it usually tracks metrics that don't mean much to the rest of the business. And if it makes investments in technology, it normally does so in tools that aim to make the life of Procurement people easier, but not necessarily that of their customers.
A classic example of this is investing in an eSourcing tool. In the overwhelming majority of cases, these types of investments are targeted at helping the Procurement person to be more efficient—a noble aim, but not enough on its own. What about the business user (our customer) who profoundly dislikes the Procurement process in the first place? How is this new investment going to make a difference to them?
And why are there still some Procurement functions that are not customer focused?
It's partly because being internally focused is easier; you have much greater control over events and do not need to rely on time, input, and buy-in from others you don't directly control. And at this point we come back to ambition. In our experience the fundamental guiding principle to ensure you have a chance to achieve your Procurement ambition, once it has been set, is to be customer focused. This is about enhancing the user experience of Procurement across the business, and it will make or break your ability to achieve your ambition.
Once it has set its ambition, a pitfall for the Procurement function is to focus on itself and the tasks it needs to do without thinking how they will impact its customers. As we have discussed, a Procurement ambition cannot be achieved only by Procurement; it is a cross-functional effort, and Procurement needs to view those other functions as customers.
Some forward-thinking CPOs have taken this concept of customer focus even further. One such CPO of a large telecoms company told me once that she had long ago abandoned the idea that her Procurement function will continue to be at the center of everything, controlling how things get purchased in the wider organization. It's just not a sustainable proposition for a function that wants to provide a valuable service to its customers.
She went on, “In the pursuit of our Procurement ambition, I am constantly looking at how I can get my function out of the way. How can I make dealing with my function more and more frictionless? How can I make it easy for the business to do things for itself that my function is doing for them today? Ultimately, I'm trying to make myself redundant!” she joked. But it was only half a joke.
The moral of this story and this chapter as a whole is that achieving Procurement's ambition is not actually about Procurement. It's about Procurement's customers.
As we said at the beginning of the chapter, identifying the correct starting point and right ambition based on that starting point is critical. But in setting out to achieve that ambition, Procurement must put its customers first, and indeed the ultimate destination of any Procurement function could well be to make itself redundant.
The ambition of Procurement is not one of domination, rather it is one of service and support to other functions.
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