To earn the loyalty of modern consumers, companies must be able to meet an increasingly complex set of demands.
Responsibly sourced, sustainable products and services; diverse suppliers and consistently ethical business practices are now minimum requirements for companies seeking to cultivate a brand worth investing in.
Of course, the ability to deliver on this growing list of demands takes years of strategic planning and diligent execution. In the digital age, consumers can reject companies in an instant. This is a frequent occurrence, and if your procurement and compliance teams work in silos, it could happen to you.
The Case for Closer Teams
Today’s corporate procurement teams need accurate business compliance data and analytics in order to manage relationships that are critical to maintaining a healthy supply chain — and they need that data quickly.
Efficient knowledge sharing among teams isn’t only critical for reputation management. It can also directly lead to reduced costs with the avoidance of expensive noncompliance fines.
Moreover, when supply and compliance teams share data sources and use the same metrics to measure risk, due diligence timelines are accelerated and risk itself is minimized. For instance, the likelihood that your procurement team unknowingly finances goods that might have been obtained illegally drops dramatically when those individuals work with their compliance counterparts. Therefore, it's crucial to make these supply chain decisions together.
In an increasingly transparent global business environment, ignorance is not an excuse for mistakes, and consumers and regulators have little tolerance for repeated mishaps. When procurement and compliance teams work in silos, those slip-ups can happen.
By working together, these teams can help their organizations reap countless benefits. In a 2019 Dun & Bradstreet survey 56 percent of respondents said their companies lacked joint compliance and procurement functions, noting that combining the two would yield a "fairly positive" or "very positive" outcome. The report series also shows that respondents focusing on both procurement and compliance have a more positive experience, especially related to internal stakeholders and resources.
Fostering Collaboration Between Procurement and Compliance
Here are three strategies for encouraging greater collaboration among procurement and compliance teams:
1. Develop a risk-based program that accounts for both teams.
Although both parties ultimately want to mitigate risks, cut costs and accelerate due diligence, procurement and compliance teams view third-party risk management through decidedly different lenses.
Companies with well-defined risk-based programs that take into account the concerns of both parties and cover all aspects of the onboarding, due diligence, and monitoring processes are more likely to meet these goals. When both teams agree on which third parties carry the greatest risk — and are in alignment on how risk thresholds are defined and used — you’ll see more consistent and effective decision-making.
Creating such a program is easier said than done, but the benefits are worth the investment. You’ll want a tool that can collect specific data on a given entity, as you can then analyze that data to determine appropriate risk ranking. The most difficult part is taking the time to agree upon which metrics to account for. Once you’ve done that, invest in technology that will be easy for your company to implement.
2. Develop consistency in process and language.
It’s not uncommon for different departments within the same company to have entirely different procedures in place — along with their own unique terminology and jargon — to achieve objectives.
If you find this issue popping up as you work to integrate your teams, consider creating an internal leadership position tasked with standardizing processes and language across departments. A strong collaborator who's able to influence employees across departments to reach consensus will be best-suited for the role.
3. Make technology a common denominator.
Just as disparate departments often rely on their own ingrained processes, they might be using separate systems as well.
If your procurement and compliance teams rely on different tools to give them the information they need, it’s likely that neither team has a complete or consistent view of third-party data. If you want to foster greater collaboration, it’s essential that you provide both teams with one comprehensive, automated workflow solution.
Digitizing processes offers competitive advantages that you often won’t realize until you experience them firsthand. By using one tool to identify, analyze and store third-party information, you’re eliminating opportunities for error associated with time-consuming and expensive manual efforts.
You’re also giving employees the opportunity to learn about how their functions and decisions impact workflow beyond their department. Some companies are starting to realize that when employees have a better understanding of the ripple effects they create, their willingness and ability to collaborate effectively with team members from other departments — and to generate value for the company — increase significantly.