This series of articles focuses on one of the most strategic activities at every company and indeed on every team: making decisions. We’ve explored how the building blocks of decision-making—defining goals and developing options—are exercised and honed daily by sourcing and procurement professionals.
So procurement doesn’t need to acquire new technical skills to be able to increase its value; it simply needs to better package and promote its capability. The skills that are most needed are communication, marketing, and selling.
A Surprising New Reputation
It’s worth considering branding at an organizational level, or renaming a group and revamping titles to better convey the usefulness of procurement.
But rebranding can also start from the bottom up, as every sourcing project is a chance to change others’ perceptions. Often this happens with surprises, and we have noted some of those surprises in the prior two articles.
Surprise: sourcing is not about resources, it’s about results. Procurement’s first question is not “what do you need” but “what are your goals?”
Surprise: sourcing is not about brilliant negotiation tactics, it’s about building more options. Procurement can help you find and develop more options that might bring more value.
Finishing the Job
After defining goals and developing options, we have a great foundation for the best possible outcome. The final step is to make the right choice. This is where sourcing professionals may face the most deeply ingrained stereotype in our field: that sourcing is all about getting the lowest price.
Obtaining competitive pricing should and will always be part of the sourcing and procurement process. But we’ve already connected our work to the company’s strategic goals and worked hard to develop options that might have a wider scope and even greater benefits than we initially sought.
So the surprise here is: sourcing isn’t about the lowest price, it’s about the greatest value.
Connecting Old Tools & Skills to the New Approach
The procurement persona shouldn’t be the miserly Scrooge painfully doling out pennies when absolutely necessary. A better image is an experienced, wise, and kindly coach. (Maybe Phil Jackson works for you.) By framing and guiding the process, procurement has set up the team to be positioned to be successful on the field—which in this case means making the right purchasing decision.
Because procurement has seen so many of these decisions, it might offer counsel to avoid common pitfalls.
This might look like:
- Reminding the team of the agreed upon goals.
- Connecting product features to specific benefits that will advance the goals.
- Steering the team away from sunk cost bias.
- Helping assess total cost, including cost of the team’s time, switching cost.
- Navigating through the uncertainty of the future by assigning probability.
These are the useful, human functions that come out of good analysis, spreadsheets and RFPs. It’s important to be able to explain why we use the tools that we do.
Spreadsheets do not show absolute truth. But they are one way to organize current expenses and activities and also project future costs. The truth that every spreadsheet projecting the future is always at least partially wrong doesn’t mean that it’s not largely useful. Spreadsheets are never the whole truth, but when done well they are an important part of the whole truth.
Requests for Proposal (RFPs) are not ways to dumb down the market offerings, make vendors do all the work and drive everything to apples-to-apples. The RFP process is an efficient way to help selected, qualified vendors let us know how they would solve our problems, and roughly how much it would cost. When done well (which sadly it often is not, but that’s another story) it’s an efficient way to manage communication.
Notice that we’re coming back to these classic tools of procurement; so familiar that they may be the first things people associate with our job. But that association represents the problem we need to fix.
A New Tool: eProcurement
Without abandoning our technique and our tools, we need to realize—and communicate—that those tools do not define our job. However, one giant step toward re-branding can be introducing our internal customers to new eProcurement tools. The best in this class have outstanding interfaces that make it easy to keep the business goals front and center, and they are generations ahead of working with an old spreadsheet.
The right new tools can help us better communicate who we are and what we do as sourcing and procurement professionals. Our job is to facilitate decisions that have the greatest positive impact with the company’s limited resources. What could be more important and strategic than that?
About the author: Jack Quarles
Jack Quarles is a speaker, consultant, and author of #1 bestsellers How Smart Companies Save Money and Same Side Selling, as well as the upcoming Expensive Sentences. He has saved companies tens of millions of dollars over two decades in the field of expense management, and often advises on RFPs, vendor selection, and outsourcing decisions. Jack is a founder of Xigo and Buying Excellence and serves on the board of Peacemaker Ministries. Jack has received degrees from Yale University and Northwestern’s Kellogg School of Business.