Exploring procurement’s continuing evolution.
In this series of posts, we have looked at how procurement can have a greater impact on enterprise risk by starting our work sooner, keeping it top of mind throughout the whole contract lifecycle, and considering each category of spend from inside and out. It’s critical to embrace procurement’s impact on risk mitigation by focusing on risk earlier in the process, and by staying proactively informed throughout the term of the contract.
Although procurement’s evolution has led to an expanded set of objectives, our priorities are still dominated by what we can and should do alone. But no function is an island. We can achieve success by acting unilaterally, but only so much.
When we learn to collaborate with others, trading joint efforts for shared benefits, we not only increase our potential for value creation, we also open the door to new types of value. Nothing worth having is easy to get, and a state of effective collaboration is no exception. In fact, achieving a state of mutually received advantage requires procurement to completely alter some of the ways we’ve worked – and thought – in the past.
We can no longer think of our objectives as being at odds with those of our suppliers: Information must be hoarded for the leverage it could represent in a negotiation. We pay a dollar more, and the supplier adds a dollar to their profit margin. We insist on better prices, so they reduce our service levels. There can only be one winner, which requires a loser – and no procurement professional intends to be that.
In a collaborative environment, none of those old lessons apply. Sharing is the rule rather than the exception. Information has limited value unless it is shared in a way that advances the causes of all parties. We invest a dollar – as does the supplier – and the joint effort pays dividends for both sides. Contracts are about innovation and advantage rather than enforcing service levels. Both parties are able to ‘win’ in ways that do not represent the need to dominate or squabble over a zero sum solution.
For procurement, reaching a state of effective collaboration with suppliers represents the realization of our full potential. This allows us to create value above and beyond the financial figure represented by savings. In fact, becoming collaborative has more to do with reaching a point of mutually shared mindset with the objectives driving the organization as a whole rather than remaining confined by a procurement-only perspective.
Be sure to check out our entire blog series on The Procurement Maturity Curve covering savings, risk and more. If you’re ready to accelerate your procurement journey through collaboration and value creation, schedule a no-obligation demonstration of our integrated modular Procurement Solution on the Determine Cloud Platform.