All posts by Cindy Rittel

How Procurement Professionals Can Look Like Rockstars

Will procurement ever achieve ‘rockstar’ status within an organisation? It’s an idea that hasn’t gained much traction in the past. But help may be at hand from a new source.

Muhammad suryanto/ Shutterstock

Despite the profession’s best efforts, the terms ‘procurement’ and ‘rockstar’ are uneasy bedfellows in a sentence. When you picture a rockstar – Keith Richards, Dave Grohl, Joan Jett, Pete Townshend – they are a free spirit; perhaps anarchic, but certainly someone who lives life by their own rules. Does this sound like procurement to you? No, me neither.

Even now, after all the efforts to make procurement a strategic partner, moving from transactional purchasing to strategic buying or strategic sourcing, the image of procurement remains the same. A profession that’s very traditional, process driven, compliant (not that this is a bad thing) and just maybe a little … boring.

Although some progress has been made, rockstar status is still a ways away. While there are huge, global names that have come from the profession, the name recognition is still an issue. You know Sheryl Sandberg, Bill Gates and Tim Cook, but do you know who their CPOs are?

Have you heard of Bo Andersson, formerly GM’s ‘Mr Purchasing’? How about Jennifer Moceri, CPO of global drinks giant, Diageo? Without wider recognition of what these rockstars have achieved, very few people outside the profession will be able to understand much about what procurement can deliver.

Collective rather than Individual?

The profession has spent so long trying to create ‘rockstar’ CPOs and leaders with global profiles that it may have lost sight of the true aim – to elevate procurement as a whole. When it comes to being a ‘rockstar’, the one thing that nearly all the greats have in common is a group by their side or backing them up. And it’s in this power of the collective that procurement’s ultimate success may lie.

For the collective profession it’s about understanding what the business needs, aligning a procurement strategy with the overall business strategy, and then delivering on this. Procurement will be treated as a strategic partner when it has earned the organization’s trust as a value-adding operation.

It might be an unpopular move, but the first thing that’s going to be on the agenda is savings. The drive in procurement has been to promote an agenda that covers more than just savings – efficiency, compliance, risk management and supplier development are just a few.

However, without even realizing it, the majority of these elements underpin savings and cost reduction. The trick is to not get too focused on savings to the detriment of the wider strategic agenda. Supplier consolidation and centralized procurement are a couple of approaches which tick both the savings box and that of the wider strategic aim of adding value.

Procurement Solutions – Your Backing Vocals

Rather stretching the metaphor of the rockstar and the band, it’s important to understand the tools available to help create your own procurement version of the Traveling Wilburys. Rockstar status won’t happen in isolation and that’s where procurement solutions and procurement consulting can take to the stage.

The best procurement solutions can help turn your data into a major strength through the power of spend analytics. Software can help organizations understand who they are spending their money with, how much they are spending and, most importantly, if they are getting what they have paid for. It makes spend visible, facilitating a greater understanding of how cost optimization and spend management will work within the wider procurement strategy.

As with any band, it’s important to pick a software solution that acts in harmony with existing systems, processes and how it will work once it’s been implemented. Given that employees are the ones who will be using it on a day-to-day basis, it’s critical that the solution is user-friendly, and that employees are trained fully.

Even the great rock bands (Queen, Black Sabbath, the Beatles) sometimes need to bring in external experts to push them on to greater things. For procurement it’s no different and the choice may be to engage procurement consulting organizations to assist.

These consultants can assist with software choices, implementation and running. But Group Purchasing Organizations (GPOs) go one step further, offering contract monitoring, spend management and collective buying power through their membership network.

This can help drive savings targets, aid supplier consolidation and all the other positives that organizations want from their procurement teams. Put simply, they help transform procurement from an undiscovered and unappreciated talent to a global rockstar!

Visit UNA to learn more about the benefits of Group Purchasing Organizations.

Captain Planet, Power Rangers, Voltron … and Procurement

A chain is only as strong as its weakest link, but the whole is greater than the sum of its parts. It’s time for procurement to consider a procurement strategy angle it has never thought of before.

By Sean P. Aune/ Shutterstock

“Earth. Fire. Wind. Water. Heart. Go Planet!” “By your powers combined, I am Captain Planet!”

If you were a child of the 80s or early 90s, there’s a fair chance that you are familiar with these words. They are, of course, the words used to summon Captain Planet, via the power of five magic rings wielded by his “Planeteers”. The cartoon acted as an advocate for environmentalism and even spawned a charity.

What, I hear you cry, does a distinctly average 1990s cartoon have to do with procurement strategy? It’s not about how procurement can help to promote environmental sustainability. Need another clue?

Cast your mind back to settling down in front of your TV on a Saturday morning in the 1980s or 1990s. Did you ever watch Voltron? How about Power Rangers? If you did, and remember how our mighty heroes defeated their nemeses, you might be beginning to get the idea.

For the Power Rangers, it was creating the “Megazord”; in Voltron it was the combination of 5 robot lions (or 15 smaller vehicles depending on which series you preferred…). As we alluded to in our introduction, when people or organizations operate alone, they can be ignored or out-maneuvered. When they team up with others, then they wield much greater power that can be leveraged to create great benefits.

From Purchasing to Strategic Sourcing

Procurement may not face overwhelming opposition in the form of giant dinosaurs or evil polluters, but it faces its fair share of challenges. Elements such as maverick purchasing and non-compliance with processes serve to undermine procurement’s position as a strategic sourcing partner to the organization.

There is also the issue for small organizations that their procurement teams are seen by suppliers as non-strategic. Through this they may lose the opportunity to negotiate better terms in a contract, or end up being so far down the supplier’s priority list that they will never be viewed as an important customer.

A wealth of literature exists on why procurement should be creating better relationships with suppliers. Why shouldn’t procurement be looking to create closer relationships with other procurement departments and work together to improve their own strategic buying potential?

Think of your procurement team as one small part of the Voltron robot. If you join together with other small parts to create a procurement mega-bot, there’s little that will be able to stop you from achieving your goals. It’s no coincidence that we often refer to Group Purchasing as procurement’s “secret weapon”.

Here are the some of the benefits that can be reaped by combing your (purchasing) powers with other procurement organizations:

  • Scale or Spend Leverage: Probably the most obvious benefit based on using greater, combined volumes to drive a better price. Also known as “buying power”.
  • Price Alignment: Where one organization is paying more for a specific product than another organization, but then align their prices to the lower one. By working together and aligning prices, Police Forces in the UK have saved over £237 million ($339.5 million) in 3 years.
  • Collective Negotiation: Similar to the idea of Collective Bargaining between organizations and employees, but in this case, procurement with other procurement teams. It extends the idea of leverage, giving even the smallest organization presence at the negotiating table.

The Power of Many

Centralized procurement is usually focused within a single organization, but who is to say that you couldn’t have centralized procurement activities as part of an overarching procurement strategy? The options are there that could make this a reality and turn your procurement team into the organizational equivalent of a power ring.

If you’re not sure where to start, then you don’t need to look much further than the potential for outsourcing procurement via one of the many procurement consulting houses. Or, if you are after procurement solutions that enable your organizations to keep more control, you may choose to investigate the option of a Group Purchasing Organization (GPO).

A GPO can offer organizations the benefits outlined above and can back up all of this with hard facts too. Savings on direct and indirect sourcing, access to pre-negotiated contracts and linking up with other organizations to really leverage scale and volume to create tangible savings.

As Captain Planet said at the end of each episode to the viewer at home, “The power is yours!” Now it’s up to you to decide how to use it and if you’ll join forces to overcome the myriad challenges facing procurement today.

Want to know more about GPOs? Contact UNA to discuss the benefits of Group Purchasing.  

Out Of Savings Ideas? Here’s How To Unlock A New Level Of Buying Power

If you feel like you’ve exhausted every avenue for finding cost savings, a Group Purchasing Organization could be the answer to your challenge.

By Andrew Paul Deer /Shutterstock

There’s a gripping scene in the last chapters of Jules Verne’s Around the World in Eighty Days where the ever-dapper hero, Phileas Fogg, finds himself on a steamboat from New York to Ireland. Going full steam against hurricane winds, the vessel runs out of coal after a few days but Fogg, desperate to get to London in time to win a wager, buys the steamer from the captain and launches a desperate plan.

He instructs the crew to feed the furnace with all the wooden parts of the ship – the cabins, bunks, masts, rafts, spars were all burned, followed by the decking itself in a “perfect rage for demolition”. By the time they reach Queenstown the steamship has been reduced to an iron hull and an engine.

Procurement and supply management professionals on the never-ending hunt for cost savings can face a similar situation. Through the identification of efficiencies, negotiations with suppliers and more drastic cost-cutting initiatives, the wooden decking of the steamship (your organization) can be rapidly stripped away until suddenly you’re left with nothing but the hull.

In an immature procurement function, it’s very easy for procurement professionals to look good by posting impressive savings figures month after month. But as your function matures and savings opportunities become harder to find, your track record suddenly doesn’t look so hot.

Where to from here? Well, that’s where innovative thinking comes in. Finding further savings after all of the obvious avenues have been exhausted takes creativity and out-of-the-box solutions. If you do plan on going back to your supplier base to negotiate lower prices, you’ll need to offer them something in return for a better deal.

Volume, volume, volume

If you’re in a situation where you need further costs savings, but your suppliers genuinely cannot budge on price, there’s one sure-fire lever to reach for – volume.

Most businesses end up paying more than they need to because they only spend a modest amount in a particular category and will never unlock the power of bulk discounts. But not every organization has the resources – or warehouse space – to ramp up their purchase volume on their own. But what if there was a way to get the discounts of “bulk” without having to buy more?

Joining a Group Purchasing Organization (GPO) gives members access to savings you would never be able to negotiate on your own. Your organization joins a group of others buying the same thing, meaning you can leverage your collective purchase and buy in bulk as a group to create buying power.

GPOs help businesses of all sizes save on indirect and direct spend. The savings are found not just through bulk discounts, but through efficiencies (such as cutting down on search time and issuing RFPs) and administrative cost savings.

Collective buying decreases suppliers’ overheads, which drives further savings for the purchasing organization. Imagine, for example, a cashier who takes five minutes to process an order. 1000 single-item orders would require 5000 minutes of labor, whereas a single order of 1000 items requires five minutes of labor.

Looking for some facts and figures?

We get it – you’re a procurement pro, and procurement pros want to see hard numbers rather than fluffy promises of savings. We can’t speak for every GPO out there, but we can prove the value of GPO membership with our own figures.

UNA is a GPO with a combined $100 billion in buying power. We help procurement professionals:

  • Boost their bottom line with deep discounts we negotiate to save an average of 22% on direct and indirect spend.
  • Gain access to steeply discounted agreements (better contracts) that would typically be out of reach.
  • Unlock exclusive savings on products and services including 80% off office supplies, 26% off hotels, 20% off parcel shipping, and more.
  • Save time through pre-negotiated contracts to get started with new suppliers in 30 days or less.
  • Keep prices stable with agreements to ensure rates don’t increase.
  • We provide a free cost analysis across your highest categories of spend and offer procurement tips and support.

OK, but how much does GPO membership cost?

Every GPO is structured differently. Some GPOs charge members a fee for their services, while other GPOs, like UNA, are paid by the suppliers themselves. We, in turn, use that fee to fund our program, so that it’s always free for our members.

Membership with a GPO creates an advantage for the member that they couldn’t get on their own. If you’re running out of cost savings ideas and want to unlock the buying power driven by bulk pricing, a GPO could be the solution needed to keep your steamship sailing along.

Interested in learning more? Contact UNA to discuss the benefits of Group Purchasing.