Louise Gapp blog, Procurement, Supply Chain...
With Brexit looming like a mysterious shadow in the not-too-distant future, UK business is bracing itself for the economic impact. If only there were some real-life superheroes waiting in the wings to save us from potential disaster… Could your organisation’s procurement function be your Superman to Brexit’s Lex Luther?
Although much publicised, Brexit and market volatility are not the only ‘bad guys’ that businesses around the world have to defend themselves against. There are many other menacing, disruptive forces exposing businesses to instability.
In recent years, some leading global retailers’ ethics have been scrutinised and their public reputations devastated with revelations about unscrupulous behaviour towards their suppliers. Transparency can be the stuff of nightmares for organisations that may discover a supplier is involved in corruption, bribery, slavery, dangerous work practices, or use of substandard components.
It is essential that organisations have a defender, a strong moral guide to ensure a clear conscience who will take demonstrative actions, like the use of squeaky clean negotiation techniques, to enable a healthy and ethical approach to managing suppliers, as well as creating a robust cost-conscious culture. These challenges teamed with frequency and voracity of carpet-pulling and direction-changing that can go on in the boardroom, require a lot of creative thinking. Ultimately it is the sole responsibility of the procurement function to decide whether to protect or profit from the volatility caused.
Do you have a superhero hiding in your procurement function?
Much like in the classic comic strip tales, the procurement department is like the protagonist’s unremarkable alter ego – a relatively overlooked business function, with their good deeds going largely unnoticed. In reality though, under the functional exterior lies a dynamic and powerful force, which could be your company’s secret weapon, ready to circumnavigate your organisation through uncertain markets.
Supply Management magazine published the results of its Managing Uncertainty Survey in which 278 senior procurement figures revealed their predictions about how Brexit will impact their purchasing decisions and processes. They also explored attitudes to procurement in general.
A staggering 94% of respondents said they believed that more investment in procurement departments would lead to improved profit margins. Frustratingly, 99% of respondents also believed procurement should have a higher profile within the organisation.
Overall, the survey results highlighted the need for procurement to extend its influence throughout the business, proving its worth by achieving greater control of spend, raising its profile and emphasising its strategic value. Many businesses do not have a procurement function, leaving finance and HR to address cost-control procedures – which is when cost-control often has an impact on headcount. With businesses operating in uncertain markets, it is increasingly critical that the true value of an effective procurement function is recognised.
How can procurement raise their reputation from back office bureaucrats to celebrated cost-saving crusaders? Ask yourself, ‘what would a superhero do?’:
Don’t let your side-kick steal your thunder
Although the dynamic duo was a formidable team, and Batman was strongly supported by Robin, the Caped Crusader never let him take the credit. Finance may present the balance sheets to the board but it’s you that made them look better – cost control and financial risk mitigation are essential for businesses to achieve and maintain stability and growth to survive the effects of Brexit-related uncertainty.
Money alone can’t buy you superhero status
Bruce Wayne wasn’t blessed with superhuman powers with which to triumph over evil. Instead, he had an endless supply of money, which obviously helps when kitting out the bat cave and utility belt, but he also did his super-heroing through years of training his body and mind. The moral of the story is that money isn’t everything, and measuring your success by cost-savings alone only tells half the story. Have a detailed spend map across your entire organisation, updated quarterly. This will tell the full story of your business’s spending, identify risks and the associated costs and inefficiencies. Streamlining processes, adding value and meeting sustainability and diversity targets are also important benefits of an efficient procurement strategy, though less tangible and measurable than cost-savings.
Wonder Woman didn’t need a mandate to save the world
One of the greatest complaints within procurement departments is that their customers engage with them too late, or often not at all – but no other department would tolerate being excluded. Procurement is your role; don’t let other departments thwart your plans. It is down to you to improve engagement with your stakeholders, and ensuring they use your expertise so you can meet your targets – go get ’em! Increase visibility of procurement activities and be a driver of sustainable strategies across the organisation. Build rapport with stakeholders early on, learn to speak their language, what makes them tick and how to influence them. Although tempting, taking them out with your laser eyes if they won’t do things your way is probably best avoided.
Most superheroes don’t work alone
Other than Superman, most superheroes tend to have at least one sidekick, or like the X-men a whole hoard of individuals working towards a common goal. Encourage your department to be engaging and collaborative with the wider organisation and to have an interest in all areas of the business – unmask maverick spend before it strikes! Be visible and approachable to other departments – be the good guy! It might make them think twice about breaking the rules or intentionally ignoring corporate procedures, procurement processes or pre-negotiated commercial terms. This way everyone wins.
Be more like Iron Man
Clark Kent spends his life switching between clumsy journalist and Lycra-clad Man of Steel, and Peter Parker has to endure watching his colleagues brand his morally sound alter ego as a hindrance. There’s only one superhero who isn’t afraid to tell the world who he really is – Iron Man. Procurement professionals, like Kent and Parker, could learn a thing or two from the inimitable Stark. The sales “heroes” are not usually backwards in coming forwards when it comes to self-promotion, but procurement seem to look at their day-to-day successes as ‘just my job.’ Make sure your organisation knows what you’re capable of and visualise the impact it has on the individual departments. While revenue will always be king to senior executives, the bottom-line is what really matters and successful procurement teams have as much impact on margins as the sales stars.
Use your skills to be the ‘Saviour of the Universe’
Saviour of the universe? OK, well maybe just your organisation – for now! Despite revenue generation being considered the most crucial business function, organisations are fast learning that ‘a penny saved is a penny earned’. Streamlined supply chains, cost-saving initiatives and improved service levels that a successful procurement function can bring could be the reason your business survives in uncertain times.
As the ominous shadow of Brexit looms ever closer, now is the time for procurement professionals to step into the nearest proverbial phone box and unveil their dynamic, world-saving alter egos! – Although you might want to check your company’s dress code before considering pants as outerwear.