This is a three part blog series written by guest author, Gary Bernstein. Gary was most recently the Head of Procurement and Strategic Sourcing at ClickUp. He has also held Procurement leadership roles at GitHub and has over 16 years of Category management and Procurement experience.
It’s that time of year again.
Departments have new budgets, leaders have things they want to spend on to achieve goals, and everyone is eagerly engaging with procurement, right? Perhaps. Or perhaps you have an organization where there may be some hesitation engaging procurement - we’ve all been there.
What is it that we, as procurement leaders, offer in terms of value to an organization no matter the age or size of the company or the maturity of the procurement department? While I know the procurement leaders out there know their value, here are some quick points you could share with a more reluctant teammate.
For the individuals who need to work with Procurement to purchase:
- Help them choose the best suppliers for the company
- Many in the organization will have suppliers they liked to work with in the past - in this case Procurement can help negotiate the best terms with this supplier which may include add-ons like additional support or implementation assistance.
- At the intake stage, Procurement, with the assistance of IT and/or technology, can also determine:
- If this is already an active supplier, do we have a contract in place or licenses available if it’s software.
- If this is not an active supplier, does the organization already have a contract with a supplier who offers similar, if not the same, services?
- Save money allowing their department to shine by spending within, if not under, budget
- If software, this can be done by Procurement working with the requester to determine the actual number of licenses needed - this is most effective for renewals when the organization has a SaaS management tool in place that will show the usage of the tool.
- Having the requester’s need known, the negotiations by Procurement may also include per seat savings on top of the savings by buying what’s needed.
- The above two points are better able to be handled by Procurement when the gift of time is given. Ideally working with department leadership and FP&A - the budgeting process should shine a light on what the plan is to renew what the organization already has and what new purchases are planned. Having the time to work on these will minimize the time needed to work on the inevitable unplanned, last-minute purchases that come up simply by having fewer time-critical requests to handle.
- If Procurement is providing wins, even these last-minute requests will benefit by having the business reach out to Procurement as soon as this new need is identified.
- Outside of the budget-planning process, having a CLM or SaaS management tool that allows for notifications to be sent to the contract/vendor relationship owner and Procurement x number of days prior to the expiration date of the contract (I prefer 90 days), this will ensure the negotiation process is not hampered by the deadline.
For the company:
- Spend visibility
- This is a common request from the CFO or department-head level to know what their total spend is and/or spend in a specific category.
- Slow down - to the speed needed to control spend - the money that flows out the door
- Like much of what Procurement does, this is a balancing act. No one wants a slow process but not putting guardrails in place to control the outflow of the organizations money adds a great deal of risk and administrative costs on top of the extra spend organizations want to limit.
- Decrease in administrative costs (purchase only what you need so what IT, FP&A, Accounting, Procurement, and Legal reviews is only on what the company needs)
- There’s a reason I am mentioning admin costs again - in the goal to save money for the company, this is something I consistently see undervalued - to take one example, if the highly paid attorneys are reviewing new agreements for duplicative suppliers, that’s time they could have been spending on a more strategic supplier. The same applies down the approval line where IT Ops, IT Security, FP&A, and A/P are called to review the request or onboard the supplier. In addition, the end result is a contract that must be accounted for and managed for the life of the contract.
- An enabler to IPO readiness if that’s the goal; if already public, maintain compliance.
- Procurement will write and maintain the purchasing and related policies and create, maintain, and/or improve the processes that ensure the as much spend as possible is managed and all needed approvals are granted before a purchase take place.
While I could go on for quite a while, I’ll stop there and let these benefits sink in. For procurement professionals, these benefits probably don’t come as a surprise to you. For those who are new to working with Procurement or don’t have the opportunity to work with us as frequently, you’ll see more and more of these values accrue over time.
