Power dynamics in procurement

“With Maintnenance, Repair and Operations (MRO), collaboration between the procurement function in an organisation and key stakeholders is absolutely essential,” says Pauline King, Country Manager at AgileOne. King has a great deal of experience in the world of indirect procurement having worked at the likes of UBS, Syngenta and Accenture.

When asked if enough organisations realise the savings that can be made by improving their indirect procurement processes, she answers with a simple “no”. Part of the problem, King explains, is that indirect procurement budgets sit outside the procurement function of an organisation, which means that implementing changes across the board requires a ‘joined-up’ approach.

 

“The procurement team should be the driving force behind change, but there is no way to enact that change without the buy-in of other parts of the business,” she explains. “I’m a big believer in custom-matching the type of procurement professional to the kind of stakeholder they will be working with. These people need to build a good working relationship and the procurement professional may need to convince the stakeholders to adopt new practices that they don’t like, so finding the right fit is essential.

 

“Something else to keep in mind is the issue of seniority – often the procurement people are more junior in an organisation than the stakeholders, so it’s important to find people who are confident and can handle that situation effectively,” she adds. “Quite simply, you need to have the right quality of procurement people in place before you bring in any sort of transformation to indirect spending – weak or ineffective individuals will cause more harm than good.”

 

King believes that what procurement are doing when they introduce new processes is effectively change management and, as such, certain key soft skills need to be used. “A lot of hand-holding needs to be done across different parts of a business to ensure that people are sold on the benefits of change,” she explains. “From my own experience working through these changes, I found that I spent at least 50% of my time selling change internally to various stakeholders.

 

“It’s common that stakeholders in MRO – often engineers – already have existing relationships with suppliers: they’ve worked with them for a long time, possibly socialise with them and there is a real reluctance to shift to a more consolidated supplier group,” she adds. “By moving to a ‘procurement-approved’ trusted supplier, stakeholders perceive that you are taking decision-making away from them, which can cause conflict.”

 

King’s advice is to think carefully about the specific skill sets of the individuals in procurement who will drive this change. “When it comes to working with engineers, you need to have a narrative that will work for them, that convinces them they should change established procedures and work in a more effective way,” she says. “In some cases, it’s worth hiring procurement people with a technical background so they can talk to engineers about what matters to them and convince them of the value in improving MRO procurement processes.”

 

Another essential element to pushing through process change is senior buy-in from the FD, CFO, MD and CEO. King points out that attempting to tackle indirect procurement without the support of a company’s board is virtually impossible. Her advice on how to achieve that support is simple – speak their language.

 

“Too many procurement professionals assume that everyone thinks in procurement terms, but the FD or CFO is likely to be only interested in cost-based reductions and what the bottom-line savings will be for the company,” King says. “In my experience you get the most credibility and support from senior management if you focus on outright savings. There are soft costs that a procurement team can improve on through new systems, processes and an overarching strategy, but all senior stakeholders want to worry about is what your estimated savings are likely to be, so focus on achievable numbers and use these to make your case for implementing change.”

 

The final piece of advice King offers is to make use of suppliers – use their data and expertise to sell in new processes. “Working with suppliers to help implement change and cut costs from your procurement process makes sense,” she explains. “This could involve anything from shifting to an eprocurement system to getting advice on how to standardise products across the business. Suppliers have valuable expertise that you should tap into to both show the savings that can be achieved and to help put practical measures in place to realise those savings.”