Why should procurement departments reinvent how they work?

May 7th, 2020
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It is still not unusual for other company departments to hold misconceptions when it comes to the procurement department. Although unfair and often exaggerated, procurement departments may find reassessing the way they work to be worthwhile in order to change these views. Performance alone is not always enough to overcome these misconceptions.   

There are three main ways for procurement departments to reinvent how they work: 

Procurement departments as an ambassador of their profession

Various persistent misconceptions surround the procurement department's reputation and are difficult to shake off. However, by taking a new, collaborative approach with other departments, the following three can be stamped out:

  • Focusing on the purchase price
  • Working in silos and ignorance of the challenges faced by other departments
  • Having excessive monitoring procedures

Procurement departments may therefore be interested in becoming more proactive by following these three steps:

  • Create a system for structured interaction with each department to share respective challenges and expectations in depth.
  • Determine/revise specifications together, including a clear and shared hierarchy of selection criteria.
  • Collaborate with finance departments to improve and simplify approval and monitoring processes for purchase requests. The aim is to co-create and, above all, have a shared process that is linked with collective performance.

Procurement departments as data strategists

Companies recognise data valuation as a way to accelerate agility and quality when carrying out operations. This is why digital transformation is the second way in which procurement departments can revamp their image.

Procurement departments can demonstrate their ability as data strategists to benefit the company as a whole. This will provide an additional opportunity for other company departments to recognise them as a strategic business partner.

Procurement departments must first establish digital gateways with key internal customers to collect data on consumer behaviour at source and in real time.

Secondly, procurement departments must use effective tools to process this data:

  • With data collected from suppliers.
  • With data from processing operations specific to procurement processes.

This will help to inspire ideas for improvement, which will benefit the entire company. 

Thirdly, procurement departments must get involved in discussions with internal customers to share these analyses and make recommendations to progress:

  • Innovations in sourcing, such as technology, value chain and value-added services
  • Supply chain optimisation  

Procurement departments taking control of their image

Procurement departments must take the time to work on a positive discourse that highlights their actions and shows how they can benefit the company.

This type of self-promotion is fully justified and is necessary for their continuous improvement processes to thrive:

  • By retaining and motivating teams around clear, shared goals.
  • By demonstrating the procurement department's role in the business continuity strategy.
  • By increasing confidence among other company departments that requests and initiatives from procurement departments are perfectly valid.

In conclusion, procurement departments have been sharing knowledge and working closely with other departments for a long time. However, the development of procurement departments is hindered by persistent misconceptions, if only in their ability to attract talent internally from other departments. It really is worthwhile for procurement departments to use their resources to promote how they are transforming.

In the same way, procurement departments should be recognised and appreciated for another of their commitments: gender equality. To find out more about this topic, take a look at the roadmap put forward by Julie Dang Tran, Managing Director of Manutan France.

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