By Dr. Tom DePaoli

Procurement has continuously demonstrated their impact to the bottom line of an organization. It has been well documented and universality recognized. Then why do many companies refuse to take advantage of this cost saving resource? Why do executives still remain skeptical of procurement’s value? In many organizations purchased materials and services account for over 50% of the cost of goods sold; yet procurement is often relegated to the bureaucratic dungeon of clerical functions.

Some of the fault lies in procurement itself. Procurement personnel are notoriously inept at marketing and selling their ideas and suggestions. They are often a harried firefighter bunch running around from one crisis to another crisis. Many departments do not have a good or comprehensive communication plan or written procurement strategy.  They fail to “toot their horn” or market their successes. Procurement fails to tell a compelling story and neglects to sell its importance. Many departments either ignore or politely humor procurement. However, procurement remains the chief cost saver for many companies, yet procurement is remarkably under resourced and underappreciated.

One of the tactics that I used was to create a self-running PowerPoint with audio that explained procurement’s mission and goals. It was specifically geared to non-procurement people and educated them on our procurement mission and how it aligned with the company’s mission. Today there are many other media avenues such as newsletters, social media, webinars, videos etc. to help tell procurement’s story.

One-way to sell procurement’s importance is to empower as many other employees outside of procurement as possible.  Have them participate in procurement, especially on cross-functional sourcing teams. They do need to be given the big picture and briefed on the sourcing methodology to start. Involving as many personnel in constructive procurement activities educates them on the value and importance of procurement. This is a bottom-up approach to educating employees on the value of procurement. It encourages them to contribute their ideas about improving services and products. Another tactic is to have procurement people actively participate in other department’s meetings, production meetings and process improvement efforts.  Procurement needs to strongly persuade other departments to participate in procurement processes and decisions. Procurement all too often fails at what I call the empowerment of employees and internal public relations.

But what can procurement do about the top executives or from top-down? Many executives have stereotypical views of procurement. One of our most successful methods to convince top executives of the value of executives is to encourage direct one-on-one collaboration with executives of your suppliers or executive to executive; especially the ones who you are partnering with and the relationship is long-term. Exchanging ideas at this level not only yields great results, but also expedites decisions and removes bureaucratic barriers to success.

The fact is that procurement runs its own Research and Development (R&D) department. Suppliers, in collaboration with procurement, are perhaps the most cost effective R&D function in a company. Jointly they often come up with leaps in technology and transformations in products. When they cooperate, they can transform a company and its products. Breakthroughs that occur via this method should receive more publicity than those developed internally!  These breakthroughs usually required very little monetary investment.

In summary getting procurement valued for its great contribution to revenue; requires both a bottom-up and top-down approach. Empower as many employees as possible to participate in procurement and solicit their ideas and suggestions.  Set up one-on-one executive exchanges with your supplier executives. Finally, systematically create a strong marketing plan to communicate your mission and successes.

Dr. Tom DePaoli

Dr. Tom DePaoli is the CEO of Apollo Solutions (www.apollosolutions.us) which does general business consulting in the supply chain, Lean Six Sigma and human resources areas. He retired from the Navy Reserve (logistics) after over 30 years of service. In other civilian careers, he was a supply chain and human resources executive with corporate procurement turnaround experience and Lean Six Sigma deployments. He is the author of eleven books on Amazon. His Amazon author’s page is   https://www.amazon.com/author/tomdepaoli