Over the years, we’ve seen a real shift in the role procurement functions are expected to play. No longer is their role just about ensuring a resilient and cost-effective supply chain, it’s increasingly about delivering insight and innovation, and driving fundamental business change.
But how can a mindset shift enable procurement functions to truly deliver on this new remit? In this article, we explore how a breakthrough to an innovation and collaboration focused mindset can see a transformation within procurement functions.
Developing an innovation-minded function
Let’s be clear on what innovation really is. For some it’s about the ability to deliver a genius ‘Eureka’ moment; a preserve of the lucky/creative/radical. For others, it’s just another jaded buzz word that really means incremental change. We think it’s something different.
We say innovation is something that anyone can do. It’s a state of mind whereby you are not wedded to the ‘way things are’, that are in the most part completely unconscious to you. When you adopt a mindset of innovation, anything is up for grabs. You look at what’s in front of you with a lens of ‘what do we really want?’ vs. ‘what do we think is realistic?’
Operating with this mindset can shift a procurement function to an entirely new context. It can enable the consideration of riskier, but potentially yielding opportunities. For example, entertaining the smaller, more dynamic suppliers such as expanding tech start-ups.
Without an innovation mindset, there can be a defaulting to the safety of large contracts with hundreds of protective covenants and a solid track record. Now, we’re not saying this is a bad thing, but not operating with the freedom and ingenuity to entertain the alternative is the type of thinking that can see procurement diminish their power and get pushed out by the rest of the organisation.
This doesn’t mean having no concern for the regulatory environment in which a function may operate. But it does mean adopting a mindset to challenge and question what is really possible vs. accepting inherited views on what limits them.
How an innovation mindset can shift relationships from ‘supplier’ to ‘partner’
How many of your suppliers consider you a collaborator? We mean true collaboration, where ideas are shared and possibilities are openly discussed? Innovation requires us to loosen the grip of protectionism and traditional negotiation tactics.
This means letting go of the idea that ‘we know best’ and entertaining the possibility that our suppliers might bring something extra to the party.
How many of your suppliers are truly honest about what it’s like to work with your organisation? What ideas have they got about the way you are procuring? And would you really listen if they told you? Innovation thinking leads to open dialogue with suppliers and means they’re more likely to adapt their own business model to suit you. A win/win outcome.
Developing the ‘partner potential’
Partnership is also state of mind. Dropping the win/lose dynamic of negotiation and instead going for the win/win collaborations is really where it’s at. This means internally, across the organisation, with suppliers, and every other which way.
Partnership is sometimes seen as a code word to mean compromise and sacrifice. Or just a nicer version of ruthless negotiation. In fact, it means doing what’s right for the whole organisation vs. your short term, functional agenda. By taking on a partnership mindset, procurement coaches the organisation to get what it really needs and doesn’t seek to block or override.
By spending time developing strong partnerships, a procurement function can facilitate intelligent decision making in a well-oiled environment. How well does your procurement function know the strategies across the rest of your business, outside the procurement agenda? How well do they know your supplier’s business strategies?
This may sound like a tall order, but taking care of these relationships and agendas allows their partners to take care of the results. By working collaborating vs. competing, the win/win solutions can be reached.
Time for change in procurement?
The key to unlocking an innovation and partnership mindset is achieved by firstly challenging the status-quo and limiters that procurement teams have historically felt bound by. Once these are uncovered and contested, a new era of flexible, collaborative, leadership can begin.
The future of procurement is demanding us to take on ‘AND’. Savings AND quality. Flexibility AND stability. Innovation AND guarantee. To survive and thrive in this era of growing and shifting expectations we need to adopt an innovation and partnering mindset that has us be open to the simplest, fastest, most revolutionary roads without the shackles of yesterday’s thinking holding us back.
Looking to create an impossible future? Get in touch to explore how we can help you ignite your ambitions.