A Function Ready For Change

Teams need to diversify and adapt to the changing face of procurement by demonstrating proficiency, adapting strategies and negotiating successfully.

In this guest post, an extract from a column that appears in the May/Jun issue of Procurement Leaders Magazine, Deutsche Telekom’s Eva Wimmers shares her view on what qualities procurement should aim to emphasise in the transformation process. 

Procurement is the one business function that has had to change the most over the past 15 years. That transformation from an internal service into a high-performing, fully effective business function is now in full swing.

This change has meant that procurement now not only acts on instructions from business departments but in many cases is defining category and vendor strategy, getting involved at the ‘design phase’ and leading discussions with the business on not just what will be bought, but how it will be procured. These are big changes and to cope under such circumstances the prerequisite from an organisational point of view is to be integrated in all decisions involving expenditure and investments from the design phase, in order to maximise its influence on costs.

To do this procurement needs to be:

• Part of the budget planning process where it can provide advice on potential price developments across different scenarios
• Part of all investment committees
• Sharing the same targets and budgets with the functions it is working with


Not involving procurement at the design phase should be considered a ‘procurement bypass’, according to the mindset of the company.

At Deutsche Telekom, procurement is involved in all of these areas and is also heavily involved in the decisions the business makes around what we buy. We call that ‘mandate’ demand-shaping.

But procurement on its own is a toothless tiger; so we favour a ‘twinship’ model where procurement acts in tandem with the respective business department.

That dialogue begins right from the design phase and lasts throughout the life cycle of the product. Together we determine the direction, speed, and which gear the journey takes. We also exchange ideas on how to lower costs through specification changes, standardisation or through changing vendors or using different vendor solutions. In this process, the roles can fluctuate flexibly in terms of who speaks about price and who speaks about the product or service, but the dialogue remains close and both parties work on achieving the common target.

To be in that playground, buyers need to prove at least three of the following qualities:

• 
Proficiency: buyers must be well educated on the product, the market, the business model and the technology that they will be working on. At Deutsche Telekom, for example, 70% of the technology buyers are engineers and are pushed to get involved outside of the business to understand the market and the different business models used.
  
  
• Bandwidth: buyers must adapt their attitudes, tone and strategy to their negotiating partner or to their internal stakeholders. Many buyers have one style that they use, which makes them predictable and is not something that senior management want to see.
  
  
• Getting to yes (Getting to Yes, 1981, R. Fisher & W. Ury): the third skill is the ability to reach agreements in spite of completely different aims. This is not about reaching a compromise that benefits no one or about a win-win situation, it is about achieving your own objectives. It is also about how you can clear the barriers that might stand in the way of a successful negotiation with your stakeholders.

These skills require the ability to listen and not just talk. Many buyers tend to spend most of their time talking instead of asking questions or understanding the circumstances and the challenges that are in the way of stakeholders or then figuring out how these can be overcome.

They often do not research the motivations and incentives of their counterparts. At Deutsche Telekom the teams are trained in that ability with special workshops and team exercises.

The modern procurement team today needs to be quite diverse with edges and strong personalities, but with excellent communication and collaboration skills. We would not employ someone who was an excellent negotiator but didn’t have these personality traits because while you can develop negotiation skills you can’t change a personality and ultimately all business is people business in procurement.


Eva Wimmers is SVP group procurement, Deutsche Telekom. She is on Procurement Leaders advisory board. 

Find out more about Procurement Leaders Magazine here. 

This contributed article has been written by a guest writer at the invitation of Procurement Leaders. Procurement Leaders received no payment directly connected with the publishing of this content.

 

from Procurement Leaders Blog http://ift.tt/1FMlOFs
This content was assembled for you by the YQ Matrix platform

The views expressed in this post and throughout the series are the autor's own and not intended to reflect the views the YQ Matrix platform, its users or any associated organisations.

For the procurement people among you, have a look at the latest YQ Matrix raw material and semi-finished prices. For: Prices on other websites.