Establishing the Right Business Culture for Procurement

Four tips to change and develop the right procurement culture

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It is the responsibility of the CPO to create the right culture for procurement. While there is a culture within the organization that reflects the overall values of the company, it is extremely important that a culture is built for the procurement team. A dedicated, hardworking, entrepreneurial, collaborative culture will support the CPO’s success in the business.

To be effective, procurement leadership must dedicate themselves to the culture and lead by example. Some cultures are focused on achieving cost reductions at the expense of anything that gets in the way. This is a challenging environment and costs the company in the long run. I always wanted my team to be very analytical with a total cost of ownership mentality, but I also expected that they would be open to ideas, suggestions and innovative ideas that would be of extreme value to the organization, while keeping the correct perspective on supplier relationships. When involved in a relationship for a category driven by competition and market share, they needed an arms-length relationship. In these markets where the balance, cost or opportunities could shift quickly, the sourcing manager must be flexible to shift with the marketplace. In more strategic situations with a sole source of supply for specification or technical reasons, where price is non-negotiable, it’s critical to build an organization-to-organization business relationship that will provide competitive advantage. The culture must also drive sourcing managers to build strong personal relationships, but at the end of the day, the business relationship always comes first.

In top class cultures, the procurement team should view every stakeholder as a customer who needs to be treated with an attitude of customer first. This requires the ability to sell the value of procurement and the ability to build fact-based presentations that influence, suppliers, management and stakeholders. It’s important to recognize that, in many cases, procurement does not own the expenditure, but it does own the procurement process.

On the outset, it seems difficult to instill these values in the culture. I’ve found these 4 actions are effective in cultivating a strong, value delivering environment.

  1. Engage, expect and prioritize the desired culture in your key managers and set the example at the top.
  2. Make the workplace great and when recruiting, keep the culture as a key attribute of your talent management profile.
  3. Where employees demonstrate the ability to meet the cultural norms reward them and the team on their adoption of the values.
  4. Develop a culture of respectful individuals, enabling them to respect ideas, challenges, internal customers and external suppliers.

Are you up for the challenge?

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