Editor’s Note: Jim Baehr is Group Leader of Sourcing Strategies Group LLC
Lately, there’s been a willingness to ask, “is Procurement really what it thinks it is?” This leads to another question “does Procurement’s desired brand identity sync with its brand image?”
The brand identity is what Procurement tells the world it wants everyone to believe it is and does. The brand image is how the world views Procurement. If the identity is out of synch with the image, what can be done? Become more Sales-like? This notion isn’t intended to be flippant or cynical – just real.
Let’s look at some recent, and not so recent, published comments:
• Forrester Research, April 2019 “Leaders significantly overestimate their true procurement maturity level”
• AT Kearney, July 2018 “Procurement has languished toward obsolescence and will die if it doesn’t transform quickly” … “CFOs question the value procurement delivers to the organization”
• Jaime Mora, January 2019 “It’s Procurement’s Own Fault That the Business Thinks We’re Only About Price”
• Remko van Hoek, Harvard Business Review, August 2013, “Looking ahead, procurement managers will have to change the way they approach suppliers and business peers; being a strategic business partner means so much more than negotiating a discount.”
• Bill Young and Charles H. Green, 2011 “There are too many unresolved conflicts between the role of procurement and its internal clients, and that the savings metrics used by Procurement belong to a former age and aggravate the problem.”
How many times have you heard … “Procurement is still addressing the same problems it was addressing twenty years ago”? The time span on the above quotes validates this claim. Compounding matters is the reality that even major entities, public and private, are still slow in adopting the precepts of modern Procurement. Worse, some have all-together abandoned these principles.
So, why the suggestion that Procurement should “perform more like Sales”? Because for years, Procurement has stated its intentions to collaborate. And, for years CPO surveys have called out the need to change the perception of Procurement within their organization – to change its image to match its identity. For some it has happened, for others it hasn’t, for many it’s happening too slowly.
The Sales / Procurement Rivalry
Aside from being on opposing sides of Porter’s Five Forces, there’s likely a sibling rivalry between Sales and Procurement within entities. There are exceptions, like in utilities where there’s only a semblance of a Sales group – it’s a prime opportunity for Procurement to shine. Both Sales and Procurement are engaged in the grand role of Sourcing, but their existence is distinctly competitive and mutually exclusive. CEOs understand the importance of Sales but may question the value of Procurement. And then there are the passive aggressive executives who outwardly appear to be agreeable and supportive, but routinely evade engaging Procurement. Finally, stakeholders see Sales as enabling the business while viewing Procurement as obstructionist.
Consider this scenario – IT has only enough budget to invest in one relationship management system. At an Executive Committee meeting the Sales VP asserts the budget should be spent for a Customer Relationship Management (CRM) system. The Procurement VP contends the monies be spent for a Supplier Relationship Management (SRM) system. All variables being equal, which VP receives the approval to proceed?
Opposing forces within the same Sourcing process
Maximizing profits Reducing costs
Extroverted – outward focus Introverted – inward focus
Emphasizes long term – customer retention Emphasizes events – one and done
Values relationships Skeptical of relationships
Out of office – engaging In the office – insulated
Wants to cooperate Wants to control/confront
Why Brands Fail?
Brian Lischer, the CEO and Founder of Ignyte, offers the following critical reasons why brands fail:
Being inauthentic Lacking competitive differentiation
Breaking your brand promise Telling ineffectual brand stories
Losing touch with customer perception Having a chaotic brand architecture
Being internally misaligned Stagnation
If you’re in Procurement, you’ll recognize these shortcomings. One or more are possibly why your brand has failed. And, you’re likely not alone. These are reasons why the Procurement brand struggles while the inverse are reasons why the Sales brand succeeds.
How to Change
To go where you want to be you must first know where you are!
Changing one’s brand image starts with introspection – a hard look in the mirror. It can’t be a reflection, a self-assessment seeing only what one wants to see or believe. It must be an assessment based on inputs and insights. What do stakeholders – both internal and external – experience daily in working with Procurement? This isn’t easy for a profession that’s introverted and controlling by nature. The next step is to transform – not just change. If Procurement wants to be appreciated like Sales, then it needs to engage like Sales. It won’t be natural. You need to lean into your discomfort. It will take time. But, when the transformation is complete, you’ll not only be appreciated by your stakeholders – you’ll also be appreciated by your Sales counterparts.
For those Procurement groups who are already there – keep setting the good example. For those in transit – keep up the good work. For those who don’t see this as being necessary – that light at the end of the tunnel … it’s the digital train that will inevitably overtake you.