Today’s guest post is from Torey Guingrich, a Project Manager at Source One Management Services, who focuses on helping global companies drive greater value from their Procurement expenditures.
In Part I, we discussed how as an organization moves from decentralized/departmental procurement decisions to a centralized procurement and strategic sourcing department, there are bound to be some growing pains when it comes to working with departmental stakeholders and that transitioning to an effective central procurement and sourcing model will require changes. We discussed two preventable gaps that undermine the transformation process and in today’s post we discuss two more.
- Lack of management tools or processes.
Procurement needs to be equipped so that once spend and suppliers come under purview, they can effectively manage each component. This doesn’t have to be a full software solution, but Procurement should be setting up some standards so that stakeholders can feel comfortable with handing off pieces of contract and supplier management to Procurement. This may start as a simple Excel sheet tracking contract notice and term dates, and can evolve to full contract management and compliance departments. With Procurement handling these components, stakeholders can reallocate their time to accomplishing departmental goals as opposed to tracking performance and dealing with contracts, SLA, and pricing issues. Having Procurement involved in supplier management can actually help the working relationship between suppliers and end users as stakeholders can rely on Procurement to play “bad cop” and push where necessary without putting the day-to-day relationships in jeopardy.
- No clear way to provide feedback.
When a business moves to a centralized model, there are sure to be some bumps in the road. It is key to have two-way communication between Procurement and other business units to continually improve and refine the process. Positive communication (e.g. sharing success stories) is a great to share how Procurement is benefiting the company and other departments (e.g. reducing costs, improving service, etc.), but be sure to also open a forum for constructive feedback. I have seen positive feedback shared through company announcements, newsletters or quick “blurbs” in departmental bulletins. Procurement departments can solicit feedback from something as simple as a quick email survey when projects close or by establishing more formal project debriefs to talk about what went right and what could have been improved with the stakeholders involved.
As Procurement professionals, it is key understand from a stakeholder perspective the challenges with letting go of control and autonomy for project and purchasing decisions. Procurement and executive-level management need to ensure that the Procurement department is being set up for success by establishing company policies and processes that will give Procurement the authority and standing it needs to be truly effective.