Collaboration is and will remain a key aspect of procurement operations for years to come. Organizations that do not already emphasize collaborative procurement should begin to do so, as the marketplace very nearly necessitates a procurement team that actively works alongside, communicates with, and promotes internal and external stakeholder relationships. In fact, the procurement organization that works closely with other stakeholders – treasury, accounts payable (AP), suppliers, product development, and the line of business – will experience a wealth of cost, visibility, and spend management benefits. For procurement teams looking to be more collaborative, Ardent Partners offers the following recommendations:
- Embed procurement staff within the business – Collaboration starts with procurement putting “boots on the ground” in order to understand and influence line-of-business decisions across the enterprise – from meeting significant stakeholders, to conveying product specifications, to mitigating sudden challenges that arise. For procurement, it is much easier to influence the business from within key business units.
- Gain alignment on objectives and metrics with different stakeholders – With Chief Procurement Officers (CPOs) and procurement teams collaborating across multiple and traditionally-siloed departments, it is critical that all line-of-business executives define common objectives, metrics, and measures for success. Otherwise, the ties that bind procurement within the organization can cause fissures if departments track metrics and define success differently.
- Share procurement data with trusted stakeholders – In that vein, it is in the CPO’s best interests to share internal data with trusted stakeholders – not just to measure progress, but to drive progress. Procurement teams cannot rely on maximum collaboration with trusted partners if they are not all looking at the same things. Also, sharing data and information can extend the value of procurement beyond its four walls.
- Close the procure-to-pay (P2P) loop – Collaboration between line-of-business users, procurement, and AP/finance becomes seamless and paperless with the deployment of P2P (eProcurement and ePayables) systems that allow end-users to purchase goods and services from preferred suppliers. From there, the order goes to the supplier, while the invoice goes to AP/Finance for quick and paperless remittance. Doing so saves the enterprise processing time, money, and potential late fees.
- Communicate with suppliers pre- and post-sourcing event for maximum value – Supplier communication is critical for CPOs and procurement teams, particularly to pass on product specifications, timelines, and expectations via RFIs and RFPs. It is also critical after the sourcing event has passed and agreement is being forged; that information should be converted into terms, conditions, and SLAs, and codified within the contract in order to secure the value that has been negotiated.
- Leverage supplier intelligence for enhanced risk mitigation – Lastly, CPOs and procurement teams should leverage their supplier relationships for the intelligence that suppliers have that other sources may not. Suppliers are the “tip of the spear” when it comes to the market, and although they are not the sole source of intelligence, they are valuable sources when it comes to measuring and mitigating risks, planning for near- and long-term changes within commodity markets, and taking advantage of unique opportunities as they appear.
Chief Procurement Officers and procurement teams have been moving mountains over the past few years, particularly as the expectation to “do more with same” has persisted beyond the Great Recession. But in order for them to elevate the enterprise to the next level of performance, CPOs and procurement teams must collaborate with trusted partners inside and outside of the enterprise. With collaborative procurement, overworked and understaffed procurement teams can find valuable partners within AP/treasury, product development, legal, line-of-business, and suppliers, and extend the value of procurement beyond its four walls. Common goals, shared information, linked processes and systems, and above all, mutual understanding, can enhance the value of procurement’s relationships inside and outside of the enterprise.
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