By Peter Smith, Managing Director Spend Matters UK/Europe

One of the advances in terms of procurement thinking in recent years has been the general understanding and acceptance that the role of procurement goes far beyond cost and savings, and is fundamentally about value. Procurement’s role is to manage (in some sense) the organisation’s third party spend in a way which drives value – that is, it helps the organisation to achieve its goals and objectives.

In the private sector, that ultimately links back to competitive advantage, while in the public sector it is generally linked to achievement to the “policy goals” of the organisation.

That is all well and good, and there aren’t many procurement professionals who would take issue with that, we suspect. So why is it that many senior executives at board level or in other business functions don’t seem to get that? Why is it that probably the majority of senior procurement professionals still have “savings” as their primary KPI or measure?

In our upcoming webinar Peter Smith will be discussing Delivering Value, (Not Just Savings). Register Now!

There must be some sort of failure of understanding and communication here, and that has to start with procurement ourselves. We’ve got to be very clear exactly what it is we mean when we talk about “value” if we are going to be persuasive when we talk to others. Then, once we understand value, we have to think about how we communicate that in a manner that will be convincing and meaningful to the different stakeholders. Finally, we need to have some means of measuring and reporting the outputs and outcomes arising from procurement activity. That last point is particularly challenging actually!

In the last BravoSolution Real World Procurement webinar of 2017, I’m going to be talking about these issues. I will try and answer some of those questions around the nature of “procurement value” and how that relates to the organisation’s objectives.

I’m also going to look at how different spend categories require different measures of value. That’s a problem in many organisations; setting common targets across spend areas when really, the value generated by a marketing services category manager is totally different in nature to that arising from the “energy” category, for instance.

We need to understand those differences clearly if we’re going to be credible when we talk about value. I don’t pretend to have all the answers, I should emphasise, and the question of measurement will no doubt continue to challenge us. But during the webinar on December 12th, I’m sure there will be some ideas and suggestions that will help the vast majority of organisations improve the way they communicate their procurement value.