5 Tips for Procurement to Bring Value to the C-Suite
How can procurement bring value to the C-suite? Sometimes we get so focused on the finance agenda that we lose sight of the fact that there’s a lot of value we can bring to other business leaders as well. Through our procurement and sourcing activities, we see a lot of the company’s operations and have ideas about how to spend company money differently to drive enterprise value.
Implementing those ideas can be hard to do because you're challenging how your partners spend their money, and you have to do that without telling them how to do their jobs. You have to approach it from the angle of partnering to reduce costs and free up money that allows them to reinvest in their other priorities. You need persistence, a willingness to let others get the credit, and a steady flow of new ideas. If one idea doesn’t work, try another one. You have to be opportunistic.
Influencing strategy and business decisions requires you to get your analytics prepared, scan the organization for strategic openings, test tolerance for change, and make sure you have the right sponsorship. When you see an idea starting to take shape, then you accelerate your efforts to get the opportunity prioritized and start executing.
This was the approach I took when I joined H&R Block as vice president of productivity and expense to support the CFO’s vision to rethink how we approached expense management. In my early days on the job, I got some interesting reactions, including a couple of people who came up to me and said, “I don’t understand why we hired you. We’re as lean as we can be.”
Over a period of three years, I have led, incubated, spearheaded, facilitated, or cajoled leaders to execute initiatives that freed up thousands of hours of labor time and millions in savings. Those same people went from “I don’t know why we hired you” to “I’m glad you’re here.” Here’s how I succeeded, and you can too.
1. Stick to the facts
My remit to influence people to think about doing things differently cast me in the role of the sand in the oyster. My job was to agitate the status quo. It was bound to put me on a collision course with a few folks.
Everyone’s got an opinion and many decisions are based on who’s the loudest voice, the squeakiest wheel, or who gets to the boss first. With that in mind, I engaged the business leaders by collecting facts and used those facts to influence strategy. I spent the first six months focused on doing spend analytics across the company so I could have a knowledgeable conversation. I also had to learn the organization and have a strong foundation.
I would bring some of the data I was reviewing and talk to different people about my ideas. I’d say, “Here are some facts about our cost structure. Have we thought about x, y or z? What do you think of this idea? What am I missing?”
One place we did that was in garbage services for our 6,500 company owned offices. On the surface things were working well – we had garbage providers, they picked up the trash, and the per-office expense was reasonable.
When we looked across our network and shared with senior operating leaders that we had over 250 providers, with various rates, pickup schedules and bin sizes, we realized that complexity actually drove a lot of effort in the field to manage it. Oh, and we also weren’t capitalizing on volume savings. By standardizing with one provider for the vast majority of our network, we simplified field effort to manage the activities and saved $250,000 annually in the process.
2. Think productivity
Many procurement functions focus on buying items efficiently, and sourcing functions are all about the right price and terms. Don’t get me wrong--those are critical functions. But the CFO’s vision was to redefine how we approach expense savings. In line with that, we defined productivity as identifying process inefficiency, eliminating it, and monetizing the benefit. That shifted the focus of the sourcing and procurement teams.
The first productivity project we did was with tax books. We started by sharing some facts with the process owner: For decades we sent a hard-copy federal and state tax book to each office for our tax pros to share for research. To make this happen, we had to orchestrate a supply chain from the IRS regulation to the text writers to the printers to distribution centers to the delivery carriers – all to deliver books to our 10,000 offices in a 3-day window to get ready for tax season.
Then the tax pros ran a risk of having multiple users at the same time. They also could not personalize it for their own use. Instead of buying it cheaper or sourcing it better, we asked why are we not doing it electronically so every tax pro has a copy that we can deliver real time? We agreed to the value of each tax pro having a copy, and the $500,000 annual savings was the fact that sealed us on going forward with the project.
3. Throw a pebble in the pond
That project was what I call a pebble in the pond—a small win that can ripple out into bigger ones, and help build the momentum required to ride big waves. I had to be very opportunistic with my initial projects. They had to have high potential to be very successful, so I could build a reputation that enabled me to pursue more aggressive ideas.
The first projects were well-defined problems with a partner who wasn’t entrenched in their processes and had a ready-made executive sponsor. You can have all the data in the world, and a great business case on paper, but you need those other elements in place too if you’re going to get anything done.
Over the last two years we’ve been re-engineering our procure-to-pay process. These types of initiatives are often huge, daunting projects. The processes are complex, the technologies delicately woven together, and as always, people are comfortable with the way things are. And I wanted to redo it all!
We started small with quick, simple wins to show we could drive process change and deliver better user experiences. We eliminated daily check runs for vendors and moved to once a week printing cycles. We took the first steps toward standardizing processes by rationalizing our payment terms from 15-plus options to just three.
We proved to the organization that we could successfully deploy technologies on top of improved processes by launching a new travel reimbursement system that the end users selected --not the process owners at corporate.
We are now deploying a state of the art procurement tool that has elements of all of the prior projects. There’s no way we could have been successful if we had just dived in and started with the hardest part first.
4. Send in a relief pitcher
Sometimes, when you find yourself with a good idea that’s meeting with a lot of resistance, it may make sense to hand it off to someone else on your team to pitch the idea. There are some people who just don’t like my style, and that’s OK. Everybody has people they struggle to influence.
We were looking at why we spend so much money on paper in our offices (We have over 170 paper forms in an average office, and spend over a million dollars a year printing the top five most used forms). It seemed like an obvious area to improve, so we started looking at how we could do things differently.
I was struggling to gain the momentum to drive the change that I wanted so I “empowered” my procurement leader to work with the field leaders on options and ideas. He was new to the company and he asked questions differently.
He suggested one small change: the envelopes we give our clients to hold their tax documents. We had one in Spanish and one in the Puerto Rican dialect of Spanish. He proposed combining the two separate envelopes into one. It’s one less piece of paper our field had to worry about stocking and we saved some money in the process. From introducing and executing on this simple idea, he continues to successfully challenge the existing practices.
Switching it up was good for the relationship and good experience for the procurement manager and field leaders,
5. Adjust your style
I try to be very thoughtful about the role I play in every productivity opportunity we go after. Am I the sponsor, the driver, the agitator, the facilitator, the leader, or the provider of specialized skills? It’s not one size fits all. I adjust my approach to the leader’s individual style, the relationship I have with that person, and the opportunity at hand.
I like to consider myself a business leader first – after all my title says VP of Productivity – with a specialized skill set in expense management. My goal is to have a variety of skills, tools, and approaches to ensure I have a seat at the table and can always add value when we’re discussing how do we do things better, faster, and cheaper.
A knock on the door
I'm a results-oriented person. I like leading projects. I’m a quick study and I’m good at operating with imperfect information. I have a tendency to jump in and say, "Okay, great, here's where we're going to go." But that’s a hard way to bring about change, especially in a larger organization.
I’ve learned—mostly the hard way—to take a more reserved, data driven approach. Now I incubate my ideas to find the ones that are really executable. I don’t worry so much about who takes the reins.
If my team can help a business leader do something they can take to the C-suite and show how it drove enterprise value such as, "Hey I saved a million dollars and 5,000 hours," I know we'll get an opportunity to come back with more ideas. And, when you no longer have to spend so much time building credibility and incubating ideas, and instead have people showing up at your doorstep saying, "I have a problem. Can you help me," that’s when you know you’re providing value to the C-Suite.