Behind the scenes
I remember the beginning of the 2000s, when, having graduated from the Faculty of Foreign Languages and just starting my professional path with no idea how to apply my profession, I worked in a large foreign company as a “project assistant” specially created for me. This “project” meant that the company was coming to the Russian market to start the local production, and I was required to translate technical documentation and accompany foreign specialists at their meetings with all kinds of contractors and coordinating bodies in order to ensure their mutual understanding. At that time, our “project” team was presented with less than a dozen of people and we were based on a peripheral industrial site that had just been bought incognito by our famous brand to install the first plant in Russia.
The HR director of the central office, who "got lucky” to lead the “project” team, burst into our modest open space of the old administrative building and, getting dirty the worn carpet with industrial boots, said from the threshold: «Vyshlova! You will work in procurement!» I was dumbfounded: "What?... We do not have such a department ...". But he insisted: “I have a supplier offer for our new department in charge!”
What a yesterday’s graduate of a humanitarian university (even with a red diploma) understand in procurement without any business practice? Nothing at all. But our company always cared about the employees: an experienced expatriate arrived quickly from the HQ to build the procurement function, and I was immediately sent to the corporate university and internship in Europe. So, my path in procurement began.
Now, looking back at almost 20 years of corporate experience, I understand how unique it was at different positions and industries. The hero of one popular film was right to say: " here is a difference between knowing the path and walking the path." And I had everything I could dream of: a new higher education (already economic), a European specialized institute for procurement management, my profession beloved, a high-paying leadership position in a large international company, freedom of decision-making and my team of smart and talented guys who loved their job like I did the mine. And there was one of them – a special one, and we would leave the big corporate business with him soon to create a company of our dreams. But let me tell about it a little later...
Today the procurement functions get in importance, because cost reduction affects profit much more than sales growth. However, all is not so easy, because buyers do not act alone: they are integrated into the company processes. And the company is people first of all, to whom you need to explain everything and repeat, over and over again, and every day overcome the human resistance to change.
Business owners and top managers can not usually see the contribution of buyers to the company's results, they do not always understand the added value of profession (even worse with understanding of ordinary employees). Making sense and building links require you to be the best in your profession that forms a profession trust to you step by step.
Here is a challenge #1: where to train your buyers? There is a large practice in Europe and the USA: you can get the procurement profession in higher schools and colleges, as well as in corporate universities. Not same in Russia. Our state education is an example: you can be an economist, financier, manager, but not a procurement specialist. If looking through continuing education courses and various commercial schools, you will find a lot of options ... about the state purchases. And what about business, about corporate procurement? There are also consultants of any kind, but what can they teach if not experienced in holding real procurement processes? Who guarantees you their abstract knowledge to be applicable in real life?
Do not forget about procurement leaders themselves with the right knowledge and practice enough to get relevant skills. But does the manager always have the resource to train his team on his own? When I have such a question in front of me, not doubting for long, I turned to European experts. This is not cheap, but they give inspiring material in accessible form not only through scientific abracadabra (when our procurement brother falls in stupor), but through the prism of real situations.
As we understood quite soon, got a procurement training is not enough, you also need to understand another areas, as well as to have various soft skills in order to “reach the right mind” in the ocean of indifference, laziness doubts and resistance. At some point, we realized that we spend 80% of our time not to benefit the company, but on working with objections.
А simple thought came to my mind that it probably happens in many companies. And here is a challenge # 2: how to transform procurement ‘as a service’ to a real business partner? How to get the the procurement performance logical inside the company's results and clear to financial people and beneficiaries on the whole? How to marriage procurement and finances? Let’s be honest ... buyers are not always friendly with analytics. But the quality of data and analysis is the right way to evaluate the KPIs correctly. Otherwise, these KPIs have no sense.
As for me, as a buyer, I was always passioned with strategic sourcing: analyzing supplier market, building a negotiation strategy and do negotiate, and getting result at the end. That was exactly I'd like to spend all my working time on. But the buyer has other tasks. First of all, you must understand the company needs in the context of poor data and sluggish internal clients, always busy or not able to explain what they really need. Once negotiations are over you should get approvals for contractual terms again with all internal services and the suppliers that can take weeks or even months. Then you watch how the contracts are applied by all parties and you have to work with users’ feedback and listen to the financiers saying “we don’t see anything in P&L!”
We discussed the situation with our procurement controller who was in charge to guarantee the efficient model of our procurement projects, the reliable analytics and method of saving calculation, and so on…, and we decided that it would be great if:
- buyers had relevant and reliable analytical data that would help them set goals and make right decisions;
- procurement managers had the opportunity to train their teams quickly enough by inviting business coaches experienced in procurement with a set of working tools and solutions at competitive price;
- CFOs would see the procurement performance in their reports;
- CEOs would understand the level of maturity of their procurement processes and the potential to be developed for a greater contribution to the business;
- and the security and internal audit services would have nothing to worry about.
Thus, the level of trust in procurement teams would increase, and buyers would be appreciated in their profession doing the favorite job.
However, not everyone knows where to start. And we had the idea to build a team of coaches that represents the procurement and business controlling professions, to help companies look at the procurement and cost management as an opportunity to provide the business with an additional competitive advantage, contributing to its efficiency and sustainable development on the market. A team that using their many years of experience, would share proven tools and solutions to help achieve a significant economic effect in procurement, integrate it into the business result of the company, promote the procurement function and correctly position it in front of beneficiaries.
A stranger among his own
Let’s talk a little about the world of procurement. Buyers represent a special caste. They sincerely believe (and it’s justified) that they earn as much money for the company as the sales people do. The buyers, as I am a part of, can be generally described with a phrase from the famous work of L. Tolstoy "No one is satisfied with his fortune, and everyone is satisfied with his wit." In fact, procurement exist in any company, but people in charge of procurement may have different job titles, and they are usually divided into four types:
- 1. professionals who are often in public;
- 2. people who are often in public, considering themselves as professionals;
- 3. professionals who are working hard for their company, and they have no time to be often in public;
- 4. random people in charge of procurement with no idea how to do.
The first two types spend a lot of time in social networks and digital communities using their working hours for self-promotion, searching for career opportunities or extra income. Of course, there are those who simply love to communicate and satisfy their needs at the company’s expenses, justifying it by professional tasks. In the case of the first type of buyers, the employer always suffers, because I know for sure that during working hours it is absolutely impossible to do something else without prejudice to your business tasks. In the second case, the community suffers, because the “procurement experts” of the second type bring the wrong values and ideas, thereby compromising the procurement profession.
In general, there is nothing wrong with professional communities, on the contrary, it is very useful for self-development. For example, the third type of buyers, working hard for the benefit of the company, completely forget about self-development, their experience quickly becomes obsolete, being in information vacuum (they really need professional networking). And the fourth category of "random buyers” sometimes do not even try to learn something new, and in this case, there is no benefit from them at all. Of course, this is just my observation.
Everything starts with people, with buyers in our case, who deal with hard internal clients, using all their charisma, patience, persuasion power and other noble qualities, but losing faith in their Mission little by little and becoming absolute cynics and snobs. Often these are people who do not know how to give and accept feedback, and only by self-control while holding a disagreement inside, pretend that your opinion is heard and may be. Often these are people with whom it is difficult to talk about ethics in procurement - they take everything at their own expense (and it’s justified sometimes). These are people who declare the readiness to exchange experiences, who do it more in order to gain recognition (until it does not create competition for them), and hardly accept another experience that can call their competences in the company into question, as they imagine. "Well, the company hired me because I am a cool expert - I do not need anyone's help, otherwise they will doubt my competence." What a bullshit! Buyers hardly accept the competition, that’s why they are not open to alternative vision and not yet ready to unite.
Of course, not everything is so simple. I believe that my beloved procurement profession is one of the most important functions in the companies. And despite the huge lag with the West, there are many smart, honest, talented guys - professionals in their field who will prove the value and importance of the profession for business. And cooperation will be possible even in the competitive environment of buyers.
On opposite sides of the barricades
And now having a very obvious Mission, I and my associate, we leave the world of big business in 2019 to create our own company of dreams.
V&G Procurement – is a professional Russian start-up, providing a range of solutions and services in the field of strategy, consulting, training and support of procurement functions in their processes, operations, cultural and digital transformation. We combine best practices to help companies increase efficiency and create new value for shareholders, bringing innovation, improving business and the well-being of people in general.
Initially, the goal of this article was to tell a success story, but it wasn’t quite about that. I mean, it wasn’t about what, where and when, but why and what for.
Of course, we invested, found and lost - this is an integral part of the path that we are at the very beginning of. What is success? The number of contracts signed? Profit growth? This is not just a commercial project for us, it is a method for changing the business environment in Russia, it is the development of the profession, culture and ethics in procurement, a method for improving the business efficiency. As for the success in our understanding, it is everywhere around: in gratitude for the help, in sharing the vision and values, in small (but such important) changes, the readiness for which we are observing.
Success has a delayed effect, because there are no “magic pills” - only systemic solutions, continuous learning and overall responsibility for the result!