Procurement Delivers Value in Eight Ways – Q&A From Our Coupa Webinar

Doesn’t time fly… it is two weeks since our webinar with Coupa, titled Procurement Delivers Value in Eight Ways – Savings Is Only One of Them!  If you missed it, you can still access it here, free on registration.

Or you can read our paper on the same topic – download here free on registration  – titled “Procurement Value – It’s Not All About Savings”.

We got good questions during the webinar from delegates, we managed to answer a few at the time, but here are some more considered (but brief) of our responses. If you asked a more specific question, you may well get a response directly from Coupa.

And an advance notice; we have one more webinar with Coupa before Christmas, on November 20^th, with a really interesting topic – “How to get IT onboard with your procurement technology business case”. There is a paper to go with that too which you can download here.

Back to the questions around procurement value…

Question – Surely you need to distinguish between GFR (goods for resale) and GNFR (goods not for resale): Wal-Mart’s back office systems are hugely superior to Fortnum and Mason’s even though they are at the low end of the market. Their technology buying is likely to be more mature.

Answer:  agreed. Procurement delivers value in different ways and that does vary across spend categories – not just GFR / GNFR, but every category will have different drivers, and procurement must understand those. Even in a very innovative business, energy procurement may well be (rightly) very cost focused, for instance, while other spend areas might be all about capturing supplier innovation.

 

Question – Some examples given concern A-class procurement products, directly linked to the core processes. But how about C-class products, all the stuff that is non-critical but needs lots of handling and suppliers. How should we approach this segment of the procurement processes?

Answer:  the overall point about understanding the value drivers applies even to those “tail spend” items. In some cases, there could be low-value spend that can actually help drive innovation, revenue growth, etc. But often, the value comes from looking for efficiency (one of our “eight ways we deliver value”) in tail spend management, which means finding low-cost routes for tail spend that gives users what they need but maintains control and still collects data (that’s another topic for a webinar itself!)

Question: Engagement across an organisation is key to success in delivering this value – how can we support procurement in that role and do you have any great examples of this?

Answer: That is again worth a webinar or three in its own right (and I know the lady who asked it could probably provide that better than me!) As I said during the session, procurement must understand these types of value, but then communication within the organisation is vital – and you must have engagement for good communication and of course strong engagement to then deliver the value.  That is such a fundamental issue for procurement success, it starts with recruiting people who have some aptitude, flows through training and development in the softer areas as well as technical skills, and then uses professional engagement, persuasion and communication tools and techniques to make it happen. Talking the language of the stakeholder… procurement people with the right attitude… various communication tools from newsletters to webpages …. measurement and reporting of procurement performance that is realistic, useful and credible … a charismatic CPO … there are many answers!

Question: I think one of the key things procurement offers is completing the vision – whether that’s focusing on total cost of ownership as well as sticker price, including non-functional as well as functional requirements, or providing a procurement plan to optimise previously disparate spends.

Answer:  That is a very perceptive comment. Procurement is one of the few business functions that tends to have a broad view across the organisation and of course beyond into supply markets. But that broad view is one of our enablers in effect – I think our list of 8 value areas then captures the different ways that we can apply that vision and understanding. And of course, in many spend areas, we will look to deliver value in more than one of the eight.