How procurement professionals can drive real value for their organizations, and as a result, tangible competitive advantage.
The call to action for the penultimate Procurement igNite is for procurement professionals to be focused on business engagement and enablement, i.e. equipping the business to meet their objectives. This can be done through collaborating with internal business stakeholders in the process driving real “value”.
Craig Rawlings, Consulting Partner, KPMG in Singapore, opened the night reflecting on the evolution of the CPO’s role - from eliminating inefficiencies and strategic sourcing to one that looks holistically at creating business-value while building deeper specialization. This comes about as technological tools are available for spend to be delegated to the broader community, and more organizations are building leaner procurement teams. Procurement has to evolve to become a business partner, helping businesses to manage their customer demands and needs, and engaging with suppliers to create innovative solutions to some of today's problems.
Mark Rabjohns, Senior Value Solutions Consultant of Coupa, noted that in the complex business environment, different functions of the same organization define and quantify value differently. Value may not even mean the same at two ends of the same transaction (customer and supplier). He observed that some of today’s process automation projects were merely implemented for technology’s sake and did not bring any real value to the customer. He advised professionals to build a culture of customer success as an objective and focus on how they are adding value to their customers. “You should make sure that your customers are successful. If you don’t know what success is going to look like when you are finished, don’t start,” cautioned Mark.
This was a good segue into the panel discussion on how procurement can bring value to the organization.
To Tiow Wei Yeong, Global Procurement Director, Asia Pacific at Diageo, value relates also to effectiveness rather than just efficiency. He opined that procurement’s role is to challenge viewpoints of the business units by using data to evaluate whether a purchasing decision will contribute to the overall success of their organization. Procurement professionals can also add value by assessing whether the suppliers of choice will result in reputational risk to the organization. For procurement to be effective, Tiow is a strong advocate of diversifying the procurement team. He sees a need to add to the team, professionals with other types of backgrounds, such as marketing, so that procurement professionals can speak the same lingo as their internal customers. There is also a need to equip procurement professionals to help business units address real business challenges.
Similarly, Jonathan Cheung, the Congress member (Asia) of CIPS Global Congress propounded that strategic sourcing's (procurement) role is to bring about collaboration across the organization. In his previous role in procurement, some of his suppliers were also key corporate clients. Thus, he would work closely with his corporate relationship management teams and the supplier account managers, and has even supported the regional CEO of Corporate Banking to prepare for sales activities. “You have to show that as procurement and strategic sourcing professionals, you are also helping to drive the growth of the business, and to reduce cost inefficiencies,” said Jonathan.
John Lim, General Manager of Supply Chain & Procurement, Asia Pacific, Middle East and Africa at ConocoPhillips shared how his team has tried to help his company change mindsets by focusing on the sustainability of supply rather than on lowest price and best quality. He described how in his role, he has built supplier relationships which resulted in a supplier developing a new product that they are now selling to other oil companies.
When the floor opened up for discussion, Sebastian Chua from Health Promotion Board shared that when his previous organization created the procurement function 20 years ago, they were given the title “Business Engagement Managers” instead of procurement managers or strategic sourcing managers. To Sebastian, the fundamental role of procurement is to enable the company’s growth through collaboration and engagement with stakeholders, suppliers and partners.
The terms "Business engagement" and “business enablement" crystalized the night's discussion in everyone's minds. Procurement can drive real value, by enabling and collaborating across the business to achieve success, e.g. cost reduction, profit, sustainable sourcing or revenue.