Don’t forget the human element when chasing value creation
Gary Noble Procurement
Sourcing and procurement professionals are used to delivering value for their organisation by saving money through traditional negotiating tactics. While that’s always a valuable way to improve financial performance, value creation these days is more about bringing innovation into your company.
For example, you could:
- Work with your suppliers to improve their performance and the quality of your products so they become more attractive to potential customers
- Develop exclusive innovations together with your suppliers that will make your product distinct from those of your competitors
- Improve your delivery or stocking procedures with suppliers so that your products can be delivered to customers on demand
Achieving 100% value creation
At a recent conference, Nick Jenkinson, Senior Director of Procurement for Astellas Pharma, urged procurement teams to focus solely on 100% value creation.
To do this, you need to know which of the activities your team performs create the most value and then get rid of all other ‘non-value add’ functions. The introduction of robotic process automation, cognitive procurement and AI means that many of the functions thought to be an essential part of the procurement process can now be replaced with technology, leaving teams to focus purely on contributing to the financial success of the business.
Don’t hide behind technology
However, while the rise of technology is making procurement more efficient, it’s also making it easier to hide behind a process or piece of technology and forget that the heart of procurement is about relationships with people.
Procurement digitalist Bertrand Maltaverne recently spoke about this; suggesting that if procurement wants to be seen as a strategic value-adding function by the business, it not only needs to improve its focus on value but also communicate that effectively. By improving its internal relationships and communications with key stakeholders in the business, a procurement team can make sure they are in line with the organisation’s overall objectives and receive recognition for the contribution they make.
Maintain human relationships with your suppliers
Completely automating your decision-making processes can also leave your suppliers feeling neglected. It’s important that they see you as keen to build relationships and work together to find win-win solutions, rather than as a hard edged negotiator who simply wants to get the price down.
Using e-procurement systems can also sometimes overlook relevant information that a human would take into account when making a decision, such as the deep specialist knowledge or track record of a supplier.
For example, 1st Executive have been involved in several tender processes to supply procurement staff, where it appears that points were given purely for price and whether a supplier specialised in procurement or not was not taken into consideration at all.
While we can all agree price is important, specialist recruiters will understand your business needs and will have access to a pool of exclusive candidates, giving you access to top-tier talent more quickly. Using generalist suppliers often means compromising on speed and quality.
After all, if you’re not able to bring in the right talent, achieving that vision of 100% value creation is unlikely ever to become a reality.
If you’d like to discuss how 1st Executive can support you in the quest for 100% value, why not get in touch on 08432 163030 or email us.