Cost reduction will never be far from the top of a business leaders to do list. In the last few years, procurement departments have seen their contribution and influence rise. A number of factors are driving this move: consolidation and tighter control of expenditure, product and process standardization, and greater negotiating power as companies see strategic procurement as a way of reaping savings that will improve their bottom lines.
The role of procurement functions is changing too. The transactional aspects of their work are becoming automated as digital technology and the Internet of Things (IoT) penetrate deeper into organizations. This frees up resource and bandwidth that can be deployed on more strategic activities such as responding to global trends and meeting internal stakeholders emerging needs. If the function is to be an agent of change and transformation, it must develop its capabilities in change management.
As the influence of the procurement function spreads, there is now a greater need to act as a change manager. Resistance to new initiatives is often the primary reason why new initiatives fail to deliver the desired benefits.Until benefits are made clear, employees anxiously await the effect the change will have on them and their immediate teams. Fear of the unknown, job loss, and increased workload occupy their minds.
For example, a large organization sought greater involvement of its procurement function in purchasing decisions. Budget holders perceived the change as a loss of control, while they continued to carry the risk of deterioration in the quality of services.
A compelling resistance tactic used by stakeholders is that the change lacks an understanding of frontline priorities. Procurement leaders will find that addressing these concerns may reveal risks that were ignored previously.
One of the common challenges faced while implementing change is that it may seem an endless road. It is imperative to have a singular focus and not let anything deter you and your team from creating the new path.
- Change Impact and Readiness: Most often, the delays occur because management fails to understand the companys readiness to accept change. Enterprises have an established way of doing business. For example, planning to build a centralized procurement function in an environment that is used to decentralization can be a significant change. Procurement change needs to be viewed in light of the overall organizational culture for the cause to gain momentum.
- Communicate Regularly and Effectively: Procurement leaders need to hone in on interpersonal and communication skills to help their staff to overcome the fear associated with change. It is essential to communicate the objectives and solicit input from the staff. There needs to be a well-defined game plan ensuring everyone is on board.
- Training Management: Organizations need to commit to helping employees prepare and adapt to their new roles. One organization wanted to transform its procurement approach, yet there was a history of little investment in staff training. Staff members were skeptical about being taught to use the proposed new systems and were concerned that they would lose their jobs. The solution simply required senior management to engage with the unions and give clear assurances. The team in charge of the transformation needed to assess training needs and create a plan to train, coach, and mentor the staff.
Involved employees will support change and will become confident advocates of the new initiatives. When change management is handled appropriately, procurement transformation yields great benefits in cost reduction, compliance, quality, efficiency, and thus profitability.