In this Insta world we are inundated with images of food so good you can practically smell it. Along with it, we have an army of commentators who dominate social media with their recipes and methods and a complete oversharing of their lives thrown in for good measure. So the procurement tragic in me wonders – what are the ingredients we need in order to cook up a successful procurement team?
Every good cook starts by washing their hands and in the same manner we should always ‘wash our face’. That is to say, when we talk about procurement savings, the function must, as a minimum, recover its costs. Whether this is to the bottom line or not, is a business-by-business value discussion and you’re all well versed in benefits measurement techniques. What is important here is to lay out the basic financial expectations and communication approach upfront. Nobody buys a kitchen and expects not to cook in it.
There are a number of benchmarks we all use to tell ourselves that our ROI multiplier is industry ‘best practice’. Typically these start at x3 as good practice with anything above becoming market leading. I’m calling BS on using these as guidance. They are compiled by organisation survey and include 50 different types of benefit measurement techniques, including augmentation of time periods and exclusions of recurrent costs. I would also suggest the majority wouldn’t stand up to any genuine audit. I’m sure though, that when viewed independently, you would sit back in awe and admire the Heston-like alchemy of their creation. Procurement rhetoric here: You can’t compare apples and oranges!
We should talk the same commercial language as our stakeholders and try to delight them by presenting new flavours, such as revenue. Revenue has gone from procurement garnish, to the sauce. I’m also an advocate of a balanced diet (well, metaphorically at least) and those that calorie count – in that I look to build a program from an informed position and not from a set of blanket assumptions. Ill-informed assumptions will put you on a collision course with the business and a lot of time spent at the table all alone reluctantly eating your greens.
If you have a proven triple bottom line strategy, even if only at a category level, now is the time to use it. Start a dialogue on what are the activities, beyond those directly attributable to cost and revenue, that create indirect benefit on shareholder value, staff retention, attracting talent, and promote the business brand – carve out your role and agree on the resourcing effort that will be directed at continued delivery. One-off or infrequent CSR glossies do not make a cookbook – even if they somehow manage to pad out a sustainability report each year. There’s also something really sad and dated about token staff deal offerings, like wilted celery. So, whilst we are not quite ready to go full vegan just yet, we can definitely start by making our benchmarks and reporting more systemically vegetarian and human(ity) capital focused for one.
There are of course a broad range of other benchmarks relating to savings achievement and a host of other performance indicators. In using any of these the message is the same – start with clean hands and a clean kitchen.
Setting the table
Risk, compliance and audit are as intrinsic to restaurant dining as cutlery, crockery and the table you sit at. Without them, you’re eating off the floor with your hands. Understanding your company risk appetite is more than just contributing to profiling and action planning, it is the ambience of your setting. It’s the music playing in the background, the lighting and the artwork on the walls.
Simply aligning your risk statements to common items like spend under contract and continuity of supply, or safety incident measurement will not imbue the restaurant with a warm risk management culture. Having an under-staffed front of house, and only a casual attention to risk, creates a reactive mindset and regularly brings your cooks out the kitchen to help clean up food spills in your dining area. My response is straightforward – hire more waitstaff and give them the crisp table linen of good governance, and great tools.
We often stress the importance of stakeholder engagement and tend to focus on our category teams as the more obvious development group. For those that know me, along with great supply outcomes, I like to celebrate the talents of our maître d’s and their staff – or as they are affectionately known in my teams – the nerds. Very little gives me more pleasure than seeing these teams grow their networks and influence through the active application of tailored governance and risk insight. They will inherit the earth (and hopefully give me a job once HR reads this blog and punts me for calling them nerds). Stakeholder engagement is a key capability for development throughout your whole establishment. Indeed, having a seamless knowledge transfer and collaboration between your kitchen and your front of house, is paddock to plate at its finest.
Using fresh ingredients and portion control
An unfortunate aspect of our industry successes and failures, in this region at least, is the rise and fall of procurement teams in cyclical corporate bleedings. We can at times resemble Jamie Oliver restaurant chains whose costs fly past their utility and there is little root cause reflection. We, as an industry, are quick to dismiss these ruptures as the outcome of takeovers, lack of understanding of the profession, rationalisation and corporate synergy harvesting. Spot the irony?
We are eager to line up for a spot at the table at these fast growing establishments and I think we should be candid about the role they play in our industry with respect to professional development. For many, opportunities to work among new groups of practitioners emerging from various market segments, dramatically accelerates their growth. The fresh food people. For others, these fast moving and energetic environments demonstrate that their ambition has extended beyond their capability and in this way they act as rugged proving grounds. Business is tough peeps. There is no doubt, in my mind at least, accelerated procurement function growth has had a significant benefit in uplifting industry capability overall and needs to be acknowledged as having done so.
On the downside however, too often these procurement factories fall out of step with the often seismic changes of business landscapes.
Failing to scale and redirect efforts to quickly respond to changing business needs can leave you exposed to becoming a pet restaurant hate of mine – tiny portions being served up on massively oversized plates. It’s the perennial procurement maxim to strike the right balance between cost, quality and quantity. What I’m suggesting here is, to extend this thinking to all the dishes we serve beyond sourcing or category management. I think we need to be continually asking the customer what they want and tailoring our menus more frequently to reflect their tastes. Ideally, well before our signature dishes have stopped being ordered.
We characterise ourselves as change agents and so we must be prepared to accept and integrate new ingredients and service techniques to change ourselves regularly as well. Every kitchen is unique and caters for a different clientele, ranging from functions, to takeaway, to intimate boutique settings. I’m saying that in all of these eateries – have clean hands, wash your face, have the tables well set, understand the mood, use fresh ingredients and serve healthy portions for all courses. Even if we know the business will just order ‘one with the lot’.
In the font of human knowledge, Wikipedia, this cooking is defined as containing three foundational elements: the social, the artistic and the technical. Highly skilled creations have the ability to captivate the customer through scientific and technical mastery, sheer artistry and above all, taste. How then can we engender such awe and delight in our customers with the dishes we serve?
We start our careers like teenagers flame grilling burgers and get accustomed to the scorched lines and the smell of burning meat with its bleeding centre – pumping out low cost fast food through sourcing. Then we become focused on the ‘art of the deal’, using meticulous preparation with the improving knife skills of category management and the staged and slow cooking techniques that deepen flavours in negotiation and supplier management. We harness data and technological efficiency on a scale like never before, and eventually, we start flambéing with delicate ingredients like value-add and innovation for some wow factor and immaculate plating. Indeed, we have the skills to do this on an industrial scale and there are some great family recipes out there that will always entertain a crowd.
To become a hatted restaurant however, there are some kitchens out there pushing the ‘art of social procurement’ further into the sensory frontier, harnessing all this experience and technology and directing it toward indigenous owned enterprises, disability service providers, living wage improvement, safety, human rights and on obtaining genuinely sustainable outcomes in every respect. My hope is that these become the core ingredients of our kitchens, as elemental as salt and pepper in the 50’s and that our businesses grab both shakers at every meal. I know that when I’m surfing around the net for something to cook, these are the recipes I’m looking for.
Read more procurement thought-leadership from Brian Peirce at https://www.procurementfromthebalcony.com/.