We were invited by Sue Barrett to contribute to Barrett’s 12 Sales Trends for 2023, titled “The Case for Human-centred Economics”. Below is the piece we wrote on the human approach to procurement. You can find Barrett’s full report here.[1].
I think we can all agree on procurement’s primary objective: creating value for the organisation. This has always been the case, and always will be. What is subject to change, however, is our definition of ‘value’.
Once, and not so long ago, ‘value’ meant profit. ‘Value’ meant securing the best contracts, generating the most savings, and – to be honest – besting the people on the other side of the table.
How things have changed, and for the better.
The rise of acronyms like HCD and ECG are a sign of the times. Human-centred design and Environmental, Social & Governance demonstrate how all facets of business have adjusted their definition of ‘value’.
Instead of believing that doing what’s profitable and doing what’s right are mutually exclusive, we now know that they aren’t only inextricably linked, but together create the greatest value of all.
Procurement is about human interaction. Don’t be fooled by all the talk around AI and machine learning, dashboards and RPA; while these are essential tools for modern procurement, they are there to serve the human workers.
What does human-centred procurement look like?
A human-centred approach to procurement involves thinking about how every person involved in the procurement function will be affected – and how they want to be affected.
This encompasses many individuals: customers, users, suppliers, stakeholders (internal and external), even those in the finance department. What do they want out of the process? What will make their life easier or more rewarding? In a word, we’re talking about empathy.
Addressing the concerns of these people will have a positive flow-on effect to the rest of the organisation, the wider business community, and the wider community in general. Why? Because what a human-centred approach to procurement aims to do is give everyone involved what they want.
What do your people want? What do suppliers want?
Your staff
What do procurement officers want? A realistic chance at capturing value. To do this right, they need time and technology. If you really want to know what a human-centred approach means for them, ask. Every procurement officer in every organisation will have something to say about what would make their job easier, or make them more effective.
Perhaps they feel time poor (who doesn’t?). Nothing saps morale and energy quite like doing mundane, repetitive tasks – like data entry – that software could do far quicker and more accurately. The adoption of more RPA would not only see these necessary but dull tasks completed faster, but free up staff so they can focus on things humans are good at – strategy and innovation.
From experience, I know many procurement officers feel they don’t have the tools they need to convince the C-suite of the merits of a particular project. When you only have a ten-minute window with management, you need the most convincing data at your fingertips.
Right now, there is software available that presents that data in easily-consumable formats. We’re talking costs due to delays (down to the day), level of stakeholder engagement, difficulty of stakeholder engagement, as well as annual and FY savings. These figures are precisely what procurement officers want at their fingertips when presenting to the decision-makers.
Suppliers
Suppliers want an equal and fair go at winning contracts. Obviously, they would also like to be paid for their product or service in a timely, effortless manner. When we approach suppliers from a human-centred perspective, we understand that the old, ‘banging-the-fist-on-the-table’ approach no longer works, particularly when working with SMEs and minority-owned businesses.
These smaller suppliers are incredibly valuable to our supply chains and the communities in which they operate. But it’s important to acknowledge that they don’t yet have the resilience of larger corporations.
Often, smaller suppliers feel the need to over-commit themselves, or promise more than they can realistically deliver, in order to win a contract. Procurement needs to work with these suppliers to develop contracts that work for both parties.
And the companies who benefit from having these small, minority-owned vendors as part of their supply chain also need to understand that they may make up a significant percentage of that business’s client base. You can’t simply pivot to another supplier if they offer a better deal.
Building empathy
Procurement has been working towards a more human-centred, inclusive approach for some time now. Tearing down the siloes and building more cross-functional processes has been an ambition of many organisations for years.
In the beginning, this was based purely on economics and doing what we considered most profitable. Now that we’re consciously operating with more empathy, this human-centred approach will only accelerate.
As our KPIs, processes and systems continue to change in reflection of this, departments will no longer find themselves competing with each other and companies will work together to find the best outcomes for all involved. More voices will have input and we’ll share in a collective responsibility for the successes and failures to come.
Practical solutions for empathic procurement
The rise of the human-centred perspective in the business world speaks to a shift in our collective mindset that acknowledges the shortcomings of how things used to be. Thinking about all parties involved, thinking about what they want, what their objectives are and what makes their role easier, can only be a good thing.
The procurement function touches on many departments and roles; that puts it in a unique position to accelerate and promote this new outlook. Practical and achievable solutions exist right now to do just that.
Organisations of all sizes are taking advantage of RPA to free up their human capital; cutting-edge data software is being used to collate and present core information to stakeholders in a compelling and efficient manner; and industry experts are running intensives on the best methods to clean up supply chains and successfully incorporate SMEs so that the relationship works in both directions.
These are but a few examples.
Empathy is no longer a dirty word that runs against profit. It’s the new business model.
References:
[1] https://www.salesessentials.com/shop/barrett-sales-trends-report-2023/
https://www.barrett.com.au/blogs/2023/7807/human-centred/the-case-for-human-centred-economics/
