Everyone Hates Procurement

Supply Change

The burning question: why is it called “procurement” anyway?
It used to be called “buying,” then it was called “purchasing,” then “procurement.” For awhile it turned into “supply chain management,” but it’s also been called “strategic sourcing.” Confused yet? There’s no need to be, because whatever you call it, it’s always been about buying what your company needs. And while we’ve been quick to change titles, we’ve unfortunately been slow to adapt to new innovations.

Does everyone actually hate procurement?
No. What it comes down to is departmental silos and lack of communication. One department might see the results of procurement and be disappointed with them, without understanding the underlying restraints and methodology that go into procurement’s purchases. In other words, everyone’s a procurement professional, but not everyone is in the profession.

Think about it like this: when you buy a car, or a refrigerator, or even your groceries, you’re doing the work of a procurement professional. But buying for a company with thousands of people and internal customers vastly increases the complexity of purchasing.

The definition of quality
Procurement spends a lot of time deciding what is the right product to buy. Sometimes they default by saying, “it’s all about quality,” but that’s a little more complicated than it seems at surface level. For instance, why would one person buy a Honda Civic and another buy a Mercedes Benz 300 series? They’re both quality cars, but their qualities are different. Procurement has to know if the quality of the product is meeting the quality standards of the customer.

The definition of quality is always different depending on whom you ask, and it can be very difficult to define depending on your internal customer. Determining what your internal customers’ specifications are for quality is one of procurement’s most important jobs.

The paradox of choice
Another aspect of procurement is what goes into deciding how many choices to give internal customers. A classic article, “The Paradox of Choice” stipulates that the more choices you give customers, the more likely they are not to purchase anything at all. That can be true with your internal customers as well.

Roy Anderson, Tradeshift’s Chief Procurement Officer, uses an example of a company that saw its spend skyrocket on spiral-bound notebooks in August and September—not because their employees needed spiral bound notebooks for work, because their children were going back to school. In this example, what the employees were ordering through procurement was not helping the company in any way.

The once and future procurement: one tool vs. apps
The old way procurement solved problems was by trying to get a single tool in front of the whole organization, then forcing everyone to use it. The problem with this approach is that employees have diverse and specialized needs so the tool that might work for one department could be wholly inadequate for another.

The future of procurement is much more customer-centric: you need a suite of tools that meet the needs of diverse internal customers. The power of an app enabled network is that it lets people use applications that are unique to their requirements. The result is better solutions for your company, your suppliers, and more digital activity to generate data to do analysis on.

Free for you: advice from the procurement pros
The first piece of advice from Roy is to listen carefully to your internal customers. You can’t understand what they need unless you are willing to devote attention to them. When you do that, you can do a better job of balancing between the needs of the whole organization and the needs of your internal customers.

Roy’s second piece of advice is to communicate clearly with your internal customers. They need to understand why changes are happening and why it’s important to streamline processes, add accuracy, and get digital data. Without communicating how that can help deliver better services, it will just cause internal confusion and consternation.