By Patricia J. Moser-Stern
If you were asked to give the 30-second elevator speech about what benefits procurement brings to an organization, what would you say?
I have asked this question of many individuals who are professionals in procurement and supply chain and, inevitably, even with advance warning, there is an inescapable reliance on terminology such as cost savings, vendor evaluation and negotiation. Some talk about strategic value-add, but when pressed to define the meaning, one is often left with the feeling that it is more about utilizing the buzzwords without a clear understanding of their significance.
So if Procurement cannot clearly articulate its value proposition, we shouldn't be surprised when our internal and external stakeholders have branded Procurement as the "necessary evil."
Some might dispute this characterization, and there is no question that Procurement is higher up the value chain in some organizations than in others. However, even the most successful Procurement groups will reluctantly admit that it requires a constant concentrated effort to maintain a respected position within all aspects of the business.
So how does Procurement evolve itself from being the Rodney Dangerfield of the organization — "I don't get no respect" — to being an integral value-added partner to the enterprise?
Procurement as a profession needs to decide what its brand image is. According to Wikipedia, marketers engaged in branding seek to develop or align expectations behind the brand's experience, creating the impression that a product or service has certain qualities that make it special or unique.
Other professions have developed effective brands. Legal is about risk mitigation; Accounting relates to the numbers; Human Resources is about the organization's human capital; Sales provides revenue generation; and, of course, Marketing creates brand awareness, amongst other things. No one in an organization would ever imply that they have the expertise that the professionals have in these disciplines. Yet most believe that they can achieve better results than Procurement in acquiring goods and services for the firm.
A significant reason for this is that Procurement continually carries the "hair-shirt" of cost savings, which when translated by the business means price at any cost. Moreover, as the individuals within Procurement are heavily "metriced" on this particular indicator, the behavior that it engenders is counter to value for money.
If it can't be measured in direct bottom-line dollars, there seems to be no marching band heralding to the senior leadership the benefit of Procurement to the enterprise. When Procurement tries to expand the discussion beyond savings, inevitably it faces the Jack Webb (from "Dragnet") of the organization: "Just the savings, ma'am, just the savings."
So how do we, as Procurement professionals, get off the hamster wheel of savings to change our brand to all stakeholders?
Procurement needs to strategically position itself as the only aspect of the corporation that truly has a 360-degree lens on the entire business. It has a full scope view into the directions of the enterprise because it has touch points with all of the internal stakeholders. In addition, with its ongoing dealings with the external stakeholders — vendors — it has additional insight into the marketplace — trends, opportunities and pitfalls. Vendors are often clients and/or competitors, which further enhances the focus on the business lens.
As the purveyors of the business standing high atop the mountain, able to see the sky, the land and the sea, Procurement can provide a vision for the business that is unavailable to most and could enhance the success of the business.
Just don't go too close to the cliff's edge and look down. You might just be enchanted by the siren's song of cost savings. You may think that cost savings will prove your value, but inevitably this just brands procurement as a one-trick pony.
About the Author: Patricia J. Moser-Stern is president of i3 advantage inc., a consultancy with global expertise in procurement and supply chain. Moser-Stern was recently recognized as a 2008 Pro to Know. More information at www.i3advantage.com.