3 reasons procurement needs to focus on winning hearts and minds
Feb 11, 2015 3:59:00 AM
The notion of “winning hearts and minds” is remarkably recent. The phrase was first used by Vernon Bartlett, a journalist and MP who was reporting on British efforts in the Malayan Emergency in 1954. (It was also a cornerstone of President Johnson’s campaign in Vietnam and an evolution of George Bush’s Iraqi adventure. As a military tactic, it’s never been that successful…)
But it’s remarkably apt for the challenge faced by many support functions in trying to make themselves more effective and efficient vis-à-vis their internal stakeholders. In a recent post, we flagged up a survey that showed just how important “people issues” were to finance functions. In that same survey CFOs were asked how they’d describe the level of co-operation between finance, HR, sales and marketing – and a massive 68% said “it needs work”.
Like finance, procurement can bring a huge amount of specialist expertise to other departments within an organization; it relies on those sister functions using the processes and technology it supplies; and it’s dependent for its effectiveness on those functions feeding data and anecdote back the other way.
What’s perhaps more remarkable than the recent provenance of the phrase “hearts and minds” is the fact that we’re still talking about how to break down the functional silos that stop all those good things from happening.
It’s one of those business magazine feature stand-bys – it never goes out of fashion because nobody ever seems to get it right. Check out this podcast from Wharton business school, issued seven years ago, featuring a survey on the most challenging topics for procurement over the next decade: “People – training and development – was number-one. Number two was the organization of global sourcing. And number three is cross-function and collaboration: how does procurement work with not only engineering and quality management – which has been the nature of the procurement department for a long time already – but also other functions like sales and marketing when it comes to requirements management?”
More recently, Proxima ran a research study with NelsonHall which found “60% of CFO respondents felt dissatisfied with procurement’s ability to improve and influence internal behaviors and attitudes toward cost/supplier management on their own”.
A problem that won’t go away, then. So why’s it worth tackling now?
Three reasons. First, interconnectedness within organizations is still accelerating. Back in 2008, we were only just scratching the surface of Big Data; the Internet of Things was talked about, but usually in sneering terms; social media really meant “Facebook”. Now? These technologies are moving compellingly into the mainstream and creating myriad new connections within and outside the organization. Procurement has a vital role to play within these interconnections, and if it’s stuck in the shadows and only called in occasionally, the ramifications are huge.
Second, procurement holds the potential to be a transformative function – but only if it’s able to understand and influence every other part of the organization. Like finance, many procurement functions don’t feel they’re getting the level of visibility into activities; and like finance, it’s often seen as a burden rather than a solution. Marketing no more wants to run a nine-month RFP for a new digital agency any more than it wants to provide ROI figures for its social media activities. But offer them a way of being quicker to buy in ad hoc services to react to consumer trends? They might just bite.
And the third reason is risk management. Businesses are increasingly virtual. Their supply chain now fulfils functions that even just a few years ago would have been in-house. That means companies are far more vulnerable to disruptions in supply, they face ethical risks from a much broader set of counterparties and are much more sensitive to relatively small changes in the behavior of “consumer” functions. If procurement isn’t woven into those departments, it can’t help manage those risks.
There are lots of ways to tackle the silo problem. Successfully re-branding procurement in your organization from being “the guys trying to cut costs” into “the guys who help us to hit our business objectives” is a great place to start. We've pulled together a short view on what the procurement team of the future could look like in the context of this challenge - take a look and let us know your thoughts.
Lastly, here's a starter for ten: how do we break down barriers and start winning the hearts and minds of all our internal stakeholders?
As always, please add your thoughts and comments in the section below.Jonathan Cooper-Bagnall