It’s the New Year, and almost everyone has made a New Year’s Resolution; lose weight, get back to the gym, learn to play the guitar, learn a new language, talk to that girl, etc.
The problem is many of these resolutions don’t survive much past March, or even January for that matter.
In order for these resolutions to stick, we must have a plan, and make incremental changes that stick and become part of our habits.
While many of us, myself included, are working toward self-improvement goals (my fitness goals are year-round, not just tied to New Years), we should also be working on goals for our Procurement processes.
What New Year’s Procurement Resolutions should we make? Herein I detail just a few.
Communicate a Unified Vision and Gain Senior Management Support
You want to make changes the procurement area of your organization. But every time you present something and implement it no one listens and it falls through. What gives?
First, make sure the vision you have created is clearly and effectively communicated. Maybe the message is getting lost in translation to the rest of your organization. You could be using too much technical jargon, and the people you are trying to get on board are zoned out. Before you roll out changes make sure you have communicated those changes well.
Then, get senior management on board. Without the support of the right VPs and Directors your plans will be dead on arrival. Try all you might, if your senior management doesn’t support you, no one will. Communicate your vision to the SM’s of your organization, show them the data of savings and value added, and sell them on the changes you are proposing. With their backing, your procurement change initiative will go further.
Is everyone in your procurement group doing things the same way? Are purchase orders and contracts all processed with the same steps each time? Or, like many organizations, is everyone doing their own thing?
In the New Year, dedicate your organization to doing things the same way each time. Standardizing processes, as well as making checklists to follow, ensure that everything is completed right the first time in your organization’s ERP system. That way no pertinent information is left out and rework is reduced. Rework costs companies hundreds of thousands, or even millions of dollars each year. Preventing this rework with standardized processes and checks can significantly impact your organization’s bottom line.
Get Involved Earlier
Best case scenario you’re already part of your stakeholder’s annual budgetary meetings.
But what if you’re not?
In the New Year, get involved immediately. As a procurement agent in your organization you should be involved at the moment of ideation – the moment your internal customer comes up with the idea of a need. If you are involved the moment the the internal customer is ready to send out a bid package, you’re already too late.
Regular meetings with your internal customer can alleviate a lot of this and ensure that the moment a need arises, you’re immediately involved in the process.
There’s a right way and a wrong way in your organization.
Your internal customer is doing things the wrong way; providing incomplete scopes of work, not involving you early enough, talking to suppliers without procurement’s involvement, coaching their favorite supplier throughout the bid process.
The answer: push back.
The saying goes: the standard you walk past is the standard you accept.
The moment your internal customer does things the wrong way, you must push back. If you haven’t in the past, start now. Proper processes, and doing things the right way – and sometimes the legal way – is paramount to keeping your organization running smoothly and remaining in business.
Does the internal customer push back when you push back? Get support from your management and senior management. (See the first paragraph in this post.)
Prepare Better For Negotiations
A few notes and an “idea” of where you want to go no longer cuts it when walking into negotiations with suppliers.
What’s your target outcome for negotiations?
What’s your optimistic position (best case scenario)?
What’s your pessimistic position (worst case scenario)?
What’s your walk away criteria?
What’s you’re best alternative to a negotiated agreement (BATNA)?
How much time have you and your team dedicated to practice negotiations?
In the new year, commit yourself to improving your negotiations preparations.
All of these practices are great – unless your organization stops doing them. Have you or someone in your organization improved a process or changed the way you were doing things – only to have people in your organization slip back to the old, inefficient, ineffective way to doing things?
Let’s face it, generally speaking human beings hate change. It’s wired into our DNA after hundreds of thousands of years of surviving. In the modern age this translates into resisting change in the workplace where the worst threat may be a spreadsheet takes twenty seconds to load.
If you want better sourcing processes to take and hold in your organization, you and your senior management have to reiterate and reinforce these new habits over and over again. Sometimes you’ll feel sick of saying it, as you’ll be sure your colleagues will be sick of hearing it.
But reinforcing these new processes through training, oversight, and tying them to the key accountabilities in personnel annual reviews will make sure they stick for years, and your organization will continue to realize the external and internal cost savings and added value they provide.
I hope these few Procurement New Year’s Resolutions start helping you and your organization start on the right track, or get back on the right track, to realizing good change in your procurement area and its processes.
And if you need more help, Meybest Procurement Solutions is available with training and consultation to take your organization tot he next level.
Happy New Year!