Procurement and finance departments are suffering from a breakdown in communication. While finance would like to see more transparency from procurement, procurement departments feel unsupported by their financial counterparts, particularly when it comes to supplier negotiations and decision-making. A survey conducted by DFCG[1], Capgemini Invent and Per Angusta on the state of the relationship between chief financial officers and chief procurement officers suggests two potential solutions for these two partners.
Formalise discussions
To improve communication between the two departments, it is important to first structure discussions. Although reports are compiled on a regular basis, opportunities to actually discuss these topics in depth are rarer.
Alongside ad-hoc meetings and informal chats between finance and procurement departments, it would be a good idea to set up a steering committee to analyse the information and priorities derived from these reports on a regular basis. This would give procurement a vested interest in involving finance in the earliest stages of their strategy development.
Optimise the quality of information
Often, finance departments are unhappy with the quality of information provided by procurement teams. Finance believes that procurement relies mostly on Excel spreadsheets to track its performance, while procurement points out that it is actually using dedicated solutions. This highlights finance's lack of visibility of existing tools.
To ensure a better quality of shared information, the two partners must work hand in hand to implement the necessary solutions together and co-create performance indicators as well as the rules for their calculation.
Using these different levers will enable the two departments to benefit from mutual understanding and become true business partners, to help improve the performance of their company. To go one step further, we have come up with three ideas to help improve collaboration between procurement and finance departments.
[1] French national association of finance directors and management control
