According to a recent survey conducted by CFO Research Services, as summarized in a recent post on How to Improve Procurement over on Procurement Leaders, finance leaders want procurement to increase its contribution in the following areas:
- Working Capital Management
especially since Procurement spends so much working capital
- Supplier Collaboration Improvement
especially since Procurement has the majority of the interaction with suppliers
- Business Performance Risk Management
as Procurement is supposed to be on the 8-ball when it comes to risk
- New Market / Business Line Expansion
as Procurement is already in foreign markets buying and probably has the most low-down
So what should you do? Start with the advice offered by the author:
- Initiate discussions with Finance on how Procurement can make the greatest contribution in their eyes.
Remember, Procurement’s biggest problem in many organizations is still its image. In many organizations it’s still seen as the island of misfit toys, the ax men, or the one-trick cost-reduction pony. It doesn’t matter how much Procurement saves, how much it reduces organizational risk, or how much value it brings, if Procurement’s image doesn’t change, then all of its contributions are for naught.
- Develop a plan to embed the right analytical and financial skill sets in Procurement.
Face it, success today depends on the ability to analyze data, extract information, and generate the knowledge that the organization needs to make the right decisions. This requires the right skill sets.
- Determine the right technology roadmap to support the strategy.
This will be a two-part strategy. In the first part, the organization will implement a closed-loop e-Sourcing and e-Procurement / P2P solution to reduce tactical processing requirements and free up more time for strategic activity. In the second part, the organization will use appropriate analytical solutions and apply it’s new analytical skills to trying to find more opportunities to increase organizational value.
And then, finally, don’t forget to create an appropriate transition plan — remember, success depends on the 3 T’s — talent (with the right skills), technology (with the right functions), and transition (to the right operational structure).