In 1980, Harvard Business School professor and economist Theodore Levitt wrote, “There is no such thing as a commodity. All goods and services are differentiable.” With this, Levitt explained how even the least exciting materials can furnish the most captivating brands. He captured how simple marketing techniques can give anonymous commodities like steel and oil new identities. With the right product positioning, anything could be made to resonate in the minds of consumers.
This emphasis on positioning is something procurement departments could take to heart. Too often, procurement is reduced to its function. Within small and large organizations alike, it’s easy for procurement to be seen as a supporting player, whose success is measured in terms of costs controlled rather than value added. Procurement professionals, however, are aware of procurement’s capacity to empower the entire enterprise. They see the potential of their department each day in the trenches.
They only need to learn to spin what they bring to the table. The best procurement departments develop and own a clear position that emphasizes their contributions to the enterprise.
Build a Position
Any good position will be clear, defensible, and unique. While positioning a consumer product requires mapping the competition and carving a space in the minds of a skeptical consumer base, your procurement department has a leg up. Your organization wants procurement to succeed. When you win, they win. You’ll still need to carefully outline where you fit and what you offer, but you’re beginning from a place of belief. Thus, your position should focus on the distinct ways procurement can bring value and insight to the enterprise.
The precise position you determine will vary. Company size, industry, supply chain depth, and employee expertise are all important to consider. Whatever your circumstances, all good positions begin with an honest appraisal of internal strengths and weaknesses. Here you need to take stock of your departmental capacities as well as your integration into broader demand planning processes.
If your employees have exceptionally strong analytical skills, you might consider positioning procurement as a center for strategic insights. If procurement is an early adopter of technological solutions, consider positioning your department as your company’s vanguard for the ensuing digital transformation. If you have outstanding category managers, consider positioning procurement as a repository of organizational and operational expertise that can amplify the productivity across the board. Given the reach and range of procurement’s duties, one of the strongest positions is that of trusted advisor.
Whatever your particular strengths, there are some consistent features of procurement that are helpful to consider:
- Because procurement works everywhere, they have insight everywhere.
- Because they’re constantly working with external vendors, they can generate critical market intelligence in real time.
- And because they’re charged with delivering business-critical supplies and services, they maintain relationships within and outside the organization that can be leveraged for positive results.
Allow yourself and your team to be creative. You know your business best.
Communicate that Position
Communicating your position is just important as having one in the first place. This is because the potential and function of procurement are likely understood. A clear position will go a long way toward expressing the role of procurement in your organization.
Here, it’s important to condense your position into a few key words. The better your position sticks in the mind of executives and stakeholders, the more work it will do for you in the long run. It’s even better to have a story to tell. If you can create a compelling narrative backing your position, executives will have a connection to the work you do. It will give them a reason to back you when push comes to shove.
Share your wins broadly. Make sure the company knows if you negotiated an important contract. Produce and disseminate case studies for external use. As long as the materials you produce are consistent with your position, the result will be increased awareness, trust and support.
Brands are never static. They grow with their consumers, and evolve to match changing preferences and needs. Similarly, your procurement position should never be static. As enterprise-wide strategy pivots and sharpens, procurement needs to remain responsive. Here’s where communication is essential. Make sure procurement is regularly briefing executives about its goals and progress, and that procurement is always in-step with finance and operations.
As you make the case for your department, try to find executive champions who will support your strategic initiatives and grow with you. Positioning enables this form of executive support to enter a self-reinforcing feedback-loop: The better your position, the easier it is to support; The more support you have, the easier it will be to shore up that position, and provide evidence of its success.
Big or small, hyper-focused or expansive in scope, procurement departments can benefit a clear position statement. In addition to garnering support throughout the organization, it can help clarify goals, establish priorities, and increase cohesion.
Founded in the heart of Boston, Fairmarkit is a SaaS platform that optimizes visibility and control into tail spend processes. While tail spend accounts for only 20% of an enterprise’s annual spend, it makes up 80% of the vendors and transactions, creating a management nightmare. Fairmarkit’s simple tail spend management platform uses machine learning to increase procurement control, yielding greater efficiencies and savings of 6-12%.
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