Taking Back Control – You Have to Give to Get

How we buy has changed as much in the workplace as it has at home.  

Access to seemingly unlimited information makes it possible to easily find a solution to most problems.  For example in IT, innovative subscription and delivery models (e.g. software as a service) make it easy to buy instantly.    The transactions are small – what could be wrong with just buying it?

This type of buying is often talked about as rogue purchasing or maverick spending.  It happens because employees or their managers consider the transaction to be too small to matter.

But maverick spending can lead to a host of internal issues, from quality complaints, to a slower buying process, to breach of contract – and it inevitably ends up hurting the bottom line.

These are precisely the outcomes that a Procurement processes are designed to stop.  But in the eyes of the spender Procurement is often seen as bureaucratic, slowing things down and making it harder to do business.

Taking back control involves letting out a little line.  As organisations become increasingly complex, as technology and end-customer behaviour changes at exponential rates there has to be a shift in approach.   Procurement can no longer own everything.

This trend has been particularly marked  in IT – with 2018 heralding the tipping point where half of the spend on technology came from outside of the IT function.  This has created a challenge of ensuring everything fits together and is appropriately supported.

It’s no different when it comes to buying in other categories e.g. marketing, telecomms etc.   To optimise costs and performance, Procurement has to own and manage strategic buying – using its category expertise to develop and manage strategies where they can have the greatest impact.   But it should be empowering business units and acting as adviser on mid-tier spend that requires lower levels of sourcing expertise.

Letting out some line has important implications.  The procurement function and process must enable collaboration and there is a requirement for the function to coach others.   

Rather than its traditional focus being on suppliers and the performance of their goods and services, it’s increasingly important to build the internal cross-functional network.   To enable the internal customers to understand when they can service themselves, when they need expert support and when to give over full control to the procurement function.

Failure to engage business units is a risk to control.  Creating engagement creates the balance – it needn’t be bureaucratic.