Your Procurement team isn’t struggling - it needs reframing
I hear something like this every day
Your Procurement team isn’t struggling. It needs reframing.
No one wants to work with Procurement, which often means there are issues that you’re blind to.
People are circumventing the procurement teams.
↳ Probably means your process sucks, and no one knows how to work with you.
Procurement processes are often built for the procurement team to get them the “stuff” they need. This is a fallacy.
We have to avoid this.
Procurement processes are business-wide. We must build processes that will be adopted and used throughout the entire business. If a process doesn’t work for your engineering colleagues, it doesn’t work.
Work with your colleagues. If you need to adapt processes for
different teams, this might not be a bad idea. Additionally, adopting agile ways of working could help massively.
We don’t know which suppliers we need to focus on.
↳ This probably means you have not risk-assessed your suppliers to understand where your attention needs to be. Remember the 80/20 rule.
Supplier segmentation is a must.
Every procurement team needs to do this. We talk about being data driven but often lack the data. Knowing which of your suppliers needs your attention is a great way to start driving better data collection. You can twist, meld, and make it useable across the organisation.
We don’t know who we’ve got contracts with.
↳ No single source of truth for your supplier and their contracts. Prioritise creating this.
No single source of truth always frustrates me. I’ve worked with many clients and organisations who failed to have this in place.
In short, you can create a decent databased in a spreadsheet or notion. I’m not saying this is ideal, because it isn’t. Far from it.
But it’s better than nothing.
Contracts contain 80% of the data you need to manage your suppliers better than ever. They contain spend data, risk data, and relationship data.
They should be a priority.
A tech-first approach is the most efficient way for your business to improve at procurement.
If you’re not improving these areas, they will get worse.
But spend each quarter working on just one of these issues to improve them radically.
PS. You may have issues different from what I’ve mentioned here, but you likely have “an issue” of some sort.
Conduct the 5 Whys to figure out what is happening. This is a mental model cheat code. The 5 Whys is one of my go-to tools every day.