Smarter Procurement: Collaboration
In the first of our 3-part series on smarter procurement, we look at how internal collaboration can help the public sector meet long-term business objectives.
We’re constantly hearing about ‘collaborative procurement’ in the UK public sector. For the most part, people are talking about buyers’ consortia or collaboration with suppliers. That’s not what we’re talking about here though. We’re going back a step to an even more critical collaboration that’s often overlooked in both commercial and public sector organisations: internal collaboration.
Not only can better collaboration give your organisation more value with every procurement decision, within the context of digital transformation, internal collaboration is critical if procuring digital services is to bring the value you hope for.
Cost-cutters vs value-adders
The image of procurement as the rigid gatekeepers or the ruthless cost-cutters is a sticky one. It needs to change, because a skilled procurement team can bring big benefits beyond cost-savings. They’re in a unique position to help any business function stretch budgets and make choices that will deliver greater value.
They have valuable market information and supplier relationships. They can calculate total lifetime cost (TLC) versus the short-term costs. They know what’s happening in other parts of the business.
The key to tapping into the value procurement can bring is collaboration.
Silos. They seem to persist, no matter how often they’re criticised. Yet each siloed team is (or should) be working towards helping to achieve the overall goals for the organisation.
Cross-functional teams make this easier. For any project, procurement should be part of the discussions from the get-go. This ensures there’s no ‘knowledge gap’ when it comes to sourcing suppliers.
Aligning goals and value
If procurement is brought into discussions from the start, they’ll understand the project requirements., the challenges and the goals of the project, and how these fit in with the big-picture business objectives. Armed with this insight, they can source the best possible suppliers, providing a balance between cost, delivery and quality that doesn’t compromise the outcomes.
And don’t forget the knowledge they’ll bring with them to the discussions too. If the cost is looking to high, you can look at cost-reduction options together, with a shared understanding of the end goals.
Supporting agile procurement and innovation
Then there’s the potential for innovation. Procurement brings a different perspective to a problem. They’ll know about other projects within the organisation, meaning they could spot potential savings or partnerships that might’ve been missed otherwise.
This collaborative process also makes it far easier to procure using an agile approach: one focused on outcomes rather than features and requirements. It’s hard to make this work without collaboration, since procurement needs a solid understanding of the overall objectives and what is valued by the business team. Agile procurement in turn supports innovation by encouraging collaboration with suppliers.
Eliminating maverick spend
Having cross-functional teams makes the need for maverick spend less likely, since someone from procurement is on hand. Understanding the goals of the team means they’re also able to understand why a purchase is needed.
Making it work
Of course, collaboration is easier said than done. To make it work, there are some pre-existing conditions you need to have in place:
Support of senior management
Unless senior management recognises the value that the procurement team can bring to the business and encourages a collaborative procurement process, there’s no point. They need them to be on board.
A proactive, skilled procurement team
Besides having good supplier knowledge and relationships, all members of the procurement team need to understand the overall business goals and strategy, as well as that of each team they’re purchasing for. To bring value to the process, they must stay current with innovation, business models and trends in the relevant sectors, and be able to calculate TLC and assess social value.
Shared goals and metrics
The procurement team needs to be aligned with the goals of the team they’re buying for. They should be unified by the goals of the organisation, but they should also be unified by shared metrics. Sharing responsibility for innovation, quality and delivery, for example.
Information needs to be shared across teams too. An open, easy-to-use system helps build trust as well as making sure that collaboration speeds things up rather than slowing them down.
Improved collaboration between procurement and the rest of the organisation can:
- Shift the focus from price to value, from short-term cost-savings to meeting long-term business objectives
- Support innovation
- Eliminate the need for maverick spend
- Simplify the procurement process
- Facilitate agile procurement.