PROCUREMENT OPTIMIZATION BLOG

A new year means many things for you and your employer.  You may want to focus on getting more yoga into your life while your employer wants to focus on year-end.  We all have goals and tasks that need to be completed as we roll into a new year.  Why not make 2018 the year that you think beyond savings and order processing? This year, your procurement resolution will be to focus on improving or creating a thoughtful supplier management plan that is clearly communicated across your organization.

Most organizations lack true alignment when it comes to managing the suppliers they interact with.  If I were to ask the suppliers who the key stakeholders are at your organization, I will most likely be told that it is a business stakeholder instead of the procurement team.  As leaders, we need to ask ourselves how we can get procurement to be top-of-mind when it comes to how our internal customers and suppliers engage with each other.

Having a poorly communicated or weakly executed supplier management plan can affect the quality of products and services as well as the entire supply chain, all the way down to your customers.  We have spent our time figuring out how to buy things and what that process should look like, but now we need to focus on how we manage and select who to buy from.  This is not an easy task but if you approach it as a partner vs. a dictator, you will be more successful.

The challenge in selling this to your organization is helping your internal customers to understand that you are not a gatekeeper and you are not trying to mandate how they do business. You are actually trying to enable them to be more successful and strategic in how they partner with suppliers.  Your stakeholders need to think of the supplier pool as ours, not mine.

Procurement should be the centerpiece of your supplier management process.  The organization should interface with external suppliers and cross-functionally through procurement to ensure we are making arrangements that benefit the business while not creating unnecessary risk.

When starting this transformation, take the time to evaluate your current end-to-end management process.  Identify the strengths and weaknesses of the groups that currently participate in supplier management and then develop a strategy that is both objective and tailored to your organization. You also want this plan to allow you to be strategic in how you select and manage these suppliers. Leverage the expertise of your legal team, the negotiating power of procurement and the relationships of the stakeholders to create a process with cross-functional synergy.

Here are some common questions that I will ask my team or organization to get the ball rolling towards a strategic transformation around supplier management:

• Who negotiates our contracts with suppliers?
  • Let procurement negotiate all financial terms with your suppliers and provide an objective review. This will allow the stakeholders to focus on quality versus the price.
• What is legal’s role?
  • Contracts need to be reviewed by legal, not negotiated.
• How do we get updated information for our supplier?
  • Leverage sourcing tools to gather and collect supplier information via portals and web forms. Make sure you understand how this data will update within your purchasing tools.
• How does accounts payable fit in the supplier management process?
  • AP needs to own the accounts receivable relationships with your suppliers.

If you can answer these questions about your organization, you are ready to make the leap into a strategic supplier management program. Take the plunge this year and have your procurement team move forward from just processing orders and sourcing.

Jimmy Hallsworth

Senior Manager