Getting the mindset right
I have been following procurement activities and landscape of the local organizations here in the Middle East region for the past 10 years. Much has changed during this period, in terms of developing the function. We have seen high caliber professionals come to manage and drive procurement efforts, tools and processes have been developed and certificates been awarded to best performing procurement teams. All in all, things are definitely going to the right direction, yet we are a long long way from the level of our colleagues in Europe and US.
Getting the clear picture of “what procurement should be and what it can do to the organization” demands for great internal sales efforts towards the top management of local organizations in the ME region. In way too many organizations procurement is seen as ad-hoc firefighting “we needed this yesterday”, transactional “call the corner shop, ask for best price and send the order”, admin function “designed to clean up and file the contracts negotiated by the stakeholders with no involvement of procurement”.
Procurement could be so much more valuable, especially for the top management and owners than this. And as said, it is moving to the right direction, change does take time!
As with all change, it won’t happen without the understanding of “Why to change? What’s the gain?”.
The mindset of how procurement function is perceived is influenced by the results it has delivered and will deliver in the future. I challenge you to take the leap, change and invest! If you continue to manage procurement with “the way we have always done it” with procurement teams, that too often have no or very little experience, and managers who have not experienced what procurement really may deliver; you tend to get results that focus on the day-to-day firefighting of clearing purchase order backlogs and explaining stakeholders why suppliers are delivering wrong products, delayed.
Surely, there are region specific challenges in implementing procurement 2.0/3.0 or whatever we want to call it. Still, there has to be a target level and understanding of benefits for the organizations. If done right, these benefits can be significant. Really significant. This needs strong leadership and vision from YOU, the top management to make this change. With falling oil prices and constant turmoil in the markets, we all need to be on our toes and ready to make changes, sacrifices and trust the vision.
Changing mindsets starts from a vision and creating results step by step. Transforming procurement from tactical daily best price deals quoting to a function that is fully integrated into the core business targets takes time and planning.
Lack of planning is one of the key challenges, I found out. Coordination and communication between key stakeholders and procurement is not functioning the right way. Then again, with the mindset that procurement just punches in PO’s and checks prices, what benefits would the stakeholders see in having procurement involved in long term planning of their business? I’ve seen what they can be and will continue being the spokesperson on every platform I am able to reach.
So here’s the advice: Stop thinking about today’s quick wins and start thinking in terms of long term benefits. The long term wins will laugh at today’s short term quick wins. Automate tactical purchasing and make it easy to use. There are great new tools that can reduce manual work and firefighting. Invest in real strategic sourcing. Invest in category expertise.
Some forward thinking organizations here in the region (i.e. Emirates NBD, Majid al Futtaim, Emirates Airlines, Mubadala), the ones who have seen the potential benefits, have already taken the steps into investing in strategic Sourcing and Purchasing. They are surely starting to see the value. Rest will follow, and the early leaders will benefit from competitive edge and bottom line benefits that possibly outpace sales growth benefits.
Text by Joonas Jantunen, CEO at Truespend
Joonas is the Founder and CEO of Truespend JLT. A Spend Management company that makes your organization more valuable. Delivering increased efficiency, transparency and profitability by executing Procurement as a Service Projects.