There’s an exciting workplace culture shift taking place in the world of Procurement. Procurement teams have come a long way in establishing themselves as valuable business partners, going beyond the traditional role of acquiring products and services. They now harness the power of spend data as a conversation starter and a superpower, adding significant value to organisations.
If you find yourself in a position where setting up a procurement department feels necessary, it’s a clear sign of a growing business. But it can be an overwhelming process. How does an organisation go about it? Where do you begin?
1. What are the Procurement Objectives?
Who has identified the need for a procurement team, or a more capable one? Was it the CFO or the COO? Why? Are there issues with compliance? Is it a basic need to cut costs? Are some stakeholders complaining that there’s no one to talk to who understands their particular area?
The answers to these questions make up the foundation on which the procurement team will be built. Once you’ve identified the primary reasons behind the need for a procurement team, you can list the objectives and start acquiring the necessary resources – personnel, software, probably both.
Talking to internal stakeholders is a must. They will have valuable insight on how the organisation is running now and what a procurement team can do to make it better. Plus, if the stakeholders feel involved in the process of building the procurement team, if they feel like they have been listened to, they will be more invested.
2. Recruit the Right Indivduals
Now that you’ve identified the procurement objectives, it’s time to find the personnel who can help you fulfil them. Take time with the recruiting process. Considering the typical hiring process can cost as much as 30% to 50% of the position’s salary, you want to get this right the first time.
To improve your chances of recruiting the right person, it’s wise to go beyond the typical interview and delve deeper into the candidate’s true capabilities. Skill gap analyses are popular to use on existing employees, but why not use them on prospective ones, too?
Get the facts on what they are actually good at, where their gaps exist, and how appropriate they really are for the role. Learn more about Skills Gap Analysis.
3. Train and Develop
Providing training and development opportunities for your procurement team is vital. Orientation and on-boarding sessions familiarise them with policies, procedures and ongoing projects. Enhance their skills through internal and external training, focusing on negotiation, contract management, data analysis and strategic sourcing.
Encourage cross-functional collaboration, job rotations and mentorship programs for valuable insights and career development. Foster a continuous learning culture with industry updates, resources, and networking events.
4. Invest in Software
Software and technology play a vital role in empowering procurement teams. They automate processes, streamline supplier management, ensure compliance and facilitate effective communication. By providing real-time spend visibility and data analysis capabilities, these tools enable informed decision-making.
The result is cost savings, enhanced operational efficiency and scalability. Procurement teams can leverage software to centralise supplier information, track performance and enforce procurement policies.
Advanced analytics and reporting features help identify opportunities for optimisation and risk mitigation. By harnessing the power of software and technology, procurement teams can drive strategic value, streamline operations and adapt to evolving business needs with agility.
5. Lead with Emotional Intelligence
Leaders with high emotional intelligence possess a keen understanding of how their emotions influence their teams. They excel at inspiring and instilling confidence in others, knowing how to motivate and uplift them.
These leaders demonstrate self-awareness by recognising their own strengths and weaknesses and are comfortable with sharing responsibilities. Their ability to navigate and manage emotions contributes to a positive and collaborative team environment, fostering productivity and growth.
6. Regularly Audit Your Processes
Continuously striving for improvement is essential, even when you believe your team is performing well. Conducting process audits allows you to identify areas for enhancement, making your workflows more efficient by eliminating unnecessary steps and reducing time and resource wastage.
The process of auditing provides valuable insights into where resources can be saved. By identifying and eliminating inefficient processes, you can redirect those resources towards more crucial responsibilities. This optimisation enables your team to operate at their highest potential, maximising productivity and focusing on tasks that truly add value.
7. Build Strong Supplier Relationships
While buyers often perceive themselves as holding a higher position than suppliers, it is crucial to cultivate good supplier relations. Building a positive rapport gives you an advantage in negotiations and can even result in better pricing, surpassing the outcomes of rigid bargaining tactics.
Maintaining strong supplier relations enables a collaborative approach. By leveraging the expertise of your suppliers, you can create more efficient processes that benefit both organisations.
An under-appreciated aspect of supplier relationships is the innovation that suppliers can bring. Suppliers, with their specific industry knowledge and technical expertise, can introduce innovative ideas, products, or processes that can significantly improve your operations. This, in turn, can boost the reputation and influence of your procurement function within your organisation, further reinforcing procurement’s role as a strategic partner.
Such arrangements are mutually beneficial. To maximise the potential of these relationships, it is vital for every team member to consistently practice effective supplier relationship management. By fostering a culture of relationship-building, your organisation can unlock the full potential of supplier collaborations and drive sustainable success.
Building a top procurement team starts with leadership
It all begins at the top: a leader at their peak enables a team to perform at its peak. At Academy of Procurement, we’ve been helping procurement leaders open new pathways that leverage collective strengths and deliver real change that benefits the organisation. Check out our range of leadership workshops and start your procurement team off on the right foot.