Thank you for reading my second post to the Sudozi blog (if you missed the first, you can read it here). I was recently interviewing for a role to be the first Procurement hire for a company and was asked what was my favorite question I’ve ever been asked in a job interview.
Essentially, I was asked what I’d do to build a best-in-class Procurement function. While there isn’t a right answer to this question - the right answer will depend on a number of factors such as the priorities and size of the company - here are some thoughts on building a valuable Procurement function for a young company that hasn’t had a Procurement hire previously with a focus on the people, process(es), and tools and will reverse the order for my response.
One of the most common frustrations I hear from company employees is about their experience navigating the chosen Procurement technology. These are tools not intended for Procurement but being used as the Procurement tool. What are some of these top issues?
There are many other ways that using a technology not intended for Procurement can and has robbed time from a company’s employees. This list is far from exhaustive but just a few ways that, historically, using tools not intended for Procurement can be very costly.
The new world of Procurement technology has made great strides in making the experience better and more efficient for those making requests and those approving requests. It feels as though this next generation of tools is still in its infancy and are only getting better by the day.
Here, then, is where I’d aim for people starting a new Procurement function. I’d look for the tool that best fits in the tech stack of my company and, when needed, can integrate with existing tools to get the most out of the tools while allowing users to, ideally, only use the one to get needed information.
I envision the ideal process being full of automations fueled by data that gets captured by the tool as well as integrations with existing tools. Here are just five examples of helpful automations and other features:
Having great tools in place won’t go far without strong processes. This is where sitting down with a representative population of users of the Procurement process as well as every team involved with approving requests will go a long way to ensure that the right questions are asked and asked clearly and that the approvers are notified when it makes sense for them.
Processes will need to be flexible to treat purchases of varied risk differently - this will show as questions applicable to the risk level and only include the needed approving teams for each.
Those first few months or longer will be spent with a single person as the Procurement team. With the foundation of strong processes in place that are continuously reviewed to make improvements and solid tools that enable these processes, the company should be seeing a marked improvement in their Procurement function. Having spoken to a number of users of the process and to members of each of the other teams crucial to the success of the processes should go a long way to having them in Procurement’s corner.
One final piece to how I answered that interview question was in regard to negotiated savings of contracts - a question that is given disproportionate time to many of the interviews I’ve had. I do strongly feel that to be consistently successful negotiating contracts, one must have market data from which to arm themselves with. Good market data costs money and negotiations take time. How can one person both save a good deal of money while improving Procurement operations? I’d argue they’ll both be less than ideal but they don’t have to. There are third parties who can actively negotiate on the company’s behalf or, when requested, provide the data needed for Procurement to negotiate effectively. These third parties can be integrated into the process fairly seamlessly.
Savings is a critical component for Procurement, and I’ll dedicate my last blog article to talk about this topic. Chat soon!