Procurement transformation. It’s a vision of most chief procurement officers.
But what does a successful procurement transformation involve?
Does it involve:
- Having the latest technological solutions up and running?
- Adding a few new procurement hotshots to your team?
- Setting new “stretch goals?”
Certainly, a procurement transformation can include all of those things.
There is a fatal mistake, however, that dooms many procurement transformations. That mistake is failing to increase the capabilities of the existing procurement team members whose day-to-day work will determine the degree of success of the procurement transformation, even if you have new technology, people, and goals.
Your procurement team members are a key part of any procurement transformation. They negotiate with suppliers, foster collaborative working relationships with internal customers, and execute your plan. So, if you want the same results that you’ve always gotten, don’t do anything. But if you want improved results, you need to take some action to ensure that every member of your procurement team has the improved capabilities necessary to deliver those improved results.
A Powerful Option
A powerful option for giving your team the capabilities it needs to deliver more to the organization than it ever has before is getting your procurement team certified. This post will focus on the five benefits that team certification has for any procurement leader who wants to make his or her vision a reality. Not a partial reality with just a new technology tool in place, but a complete reality with improved results in every aspect of procurement’s operations.
Procurement Team Certification Benefit #1 – Better Internal Perception
The saying is “perception is reality.” To a procurement leader like you, this means that, if senior management thinks your procurement team is less than fully competent, they might as well be less than fully competent.
What does your senior management think of your procurement team? Maybe they already think you have a world-class team. Or maybe they think your team isn’t exactly comprised of the best and brightest employees in the company. Or perhaps they really have no idea how to tell if a procurement professional is great, average, or below average.
A procurement certification represents a third-party standard of excellence. Individuals with a procurement certification can prove that they have met a standard of excellence. Without third-party validation, any claim of excellence is highly subjective. And do you want to have a debate with senior management whether your team has the right capabilities or not when neither side will have objective evidence?
But senior management isn’t the only constituency that has a vested interest in whether your procurement team is capable. Internal customers certainly have a vested interest as well.
Internal customers – like anyone considered a “customer” – often have a “what have you done for me lately?” attitude. So, what have you and your procurement team done for them lately? What strides have you taken to improve the procurement department’s service for your internal customers?
If your answer even vaguely resembles “not much,” you have a problem.
A successful procurement transformation is only complete when everyone in an organization embraces the mission of the procurement department and willingly complies with procurement directives. That veritable nirvana is only possible when the procurement department demonstrates a tangible commitment to a high level of service.
Deploying the same people with the same capabilities as they had in the past to serve your internal customers will do little to inspire their confidence that things will get better for them, especially when your internal customers are diligent about earning and maintaining their own certifications: engineers will have the Professional Engineer (PE) certification, quality personnel will have the Certified Quality Auditor (CQA) certification, and finance professionals will have the Certified Public Accountant (CPA) certification.
Can you imagine a finance department without any CPA’s? You wouldn’t have much faith in that finance department, would you? Well, if your internal customers are meeting standards in their professions and your procurement department is not, they won’t have much faith in your procurement team.
That being said, having your procurement team meet third-party standards for excellence in the profession can go a long way to show internal customers that you are serious about making a difference. Not making a selfish difference that will only benefit the procurement department and you as its leader, but an unselfish difference that will benefit your internal customers.
So, overall, having your procurement team certified will foster a more positive image for your department and the company.
Procurement Certification Team Benefit #2 – Higher Return on Investment
Many procurement departments are evaluated on their return on investment (ROI). Return on investment answers the question: for every dollar spent on a procurement department’s budget (i.e., for expenses like salaries, benefits, facilities, equipment, technology, etc.), how many dollars are returned to the organization in the form of cost savings or additional revenue?
So, with that in mind, how can your team generate more cost savings to boost return on investment? One might answer this question with a list of various strategies, tactics, and techniques. But the bottom line is that, to execute most of those strategies, tactics, and techniques, you need people who know what they are doing.
When a procurement department has people who “know what they are doing” – and procurement professionals who earn a certification clearly know what they are doing – the return on investment can be impressive. To illustrate this point, a recent 2,100- participant survey conducted by Next Level Purchasing revealed that procurement professionals who had earned the SPSM® Certification achieved annual cost savings and avoidance that significantly exceeded the annual cost savings and avoidance that was achieved by procurement professionals that did not have the SPSM®. The amount of the difference was $476,027 (US) per person per year. That’s not total savings and avoidance – that’s the additional savings and avoidance achieved by those with that certification!
As a procurement leader, you want senior management to trust you when you request that they invest in your department for things like technology, additional headcount, or other resources. Producing significantly improved profitability through a modest investment like getting your team certified can help your case when requesting more funding for other projects.
A certified procurement team can deliver improved bottom-line results and can increase the return on investment an organization gets from its procurement department.
Procurement Team Certification Benefit #3 – A Stronger Team
Think about something for a second. “Supplier” vs. “vendor.” “Cost savings” vs. “cost avoidance.” “Purchasing” vs. “procurement” vs. “supply management” vs. “sourcing” vs. “spend management.”
The procurement profession has many terms. Some of those terms are used interchangeably. Some of these terms are interpreted differently by different organizations. Some employers do not prescribe standard usage at all and can have different employees using different terms to describe the same thing or taking different approaches to implementing the same concept.
This is not a good thing for procurement leaders. A goal of every business leader is to get his or her team “on the same page,” speaking “the same language,” and working towards a common goal. Not even being able to settle on how a term is used – let alone how the processes behind that term are executed in the workplace – is an impediment to achieving maximum procurement success.
If your procurement team is given the opportunity to earn a certification, it can unify the team by standardizing terminologies and strategies among all procurement team members. Everyone will be on the same page, working towards the same objectives using the same best practices. Everyone will be doing things “the right way” instead of each individual doing things “their own way.” Leaders need a team atmosphere to get unprecedented positive results and unifying a team’s approach to procurement work through a common certification is an effective way of building that team atmosphere.
Speaking of a team atmosphere, you have to also consider the human side of leadership. Excelling at the human side of leadership means cultivating an environment where team members have a passion for contributing to the team’s (and the leader’s) success. To get team members to do what’s best for you as the leader, they have to feel that you are doing what’s best for them as individuals.
While an entire procurement team that is certified will obviously contribute to the success and profitability of the organization as described in Procurement Team Certification Benefit #2, there is benefit to the individual as well. Certified individuals have a feeling of pride in their accomplishments and will have long-lasting credentials that they feel take them to a new plateau in their careers. The fact that your organization supported those individuals in enhancing their careers will inspire gratitude, loyalty, and a desire to “scratch your back” because you have scratched theirs.
Having a procurement team certified brings unity, buy-in, and strength to the team.
Procurement Team Certification Benefit #4 – Increased Supplier Respect
Where are the savings opportunities for a procurement department? They are where the money is.
And where is the money? It’s not primarily in the salaries of the procurement team nor anywhere else in the procurement budget for that matter.
The money available for recapture is going to suppliers. And the interactions with those suppliers will determine how much of that money can be brought back into your organization and applied to its bottom line.
Sure, negotiation is part of that. A good negotiator will certainly be able to keep more of your organization’s money from going elsewhere.
However, negotiation isn’t the only way that money typically flowing to the supply base stays put in your organization. Collaborating with suppliers on joint cost take-out projects can also be very effective at boosting the bottom line through smart procurement.
Whether it’s a negotiation session or a cost take-out collaboration session, to maximize the results, you need key supplier decision-makers at the table. Everyone knows that a sales rep does not have the authority to give up the same margin as a vice president of sales or a CEO. The same is true of collaboration – you need to deal with someone who has the decision-making power and influence to make mutual profit-boosting collaboration successful.
But having a non-certified procurement representative leading the negotiation or collaboration sessions is less likely to inspire a supplier to send its top people. However, a procurement professional with certification credentials is likely to be given more respect, thus getting the key supplier decision-makers to the table and enabling more positive things to come out of negotiation and collaboration sessions.
Because so much business is done internationally these days, it is worth mentioning that it is important to pursue a certification for your team that is globally recognized. If a certification is issued by a national organization and has limited international recognition, you are less likely to get the same leverage with a foreign supplier from that certification than if your team had a certification that was earned and recognized in the supplier’s country.
A certified procurement team will get more respect from the supply base. And more respect in the supply base can lead to better results.
Procurement Team Certification Benefit #5 – Industry Recognition for Leaders
Earlier, we talked about senior management’s perception of your procurement team. Now, let’s talk about you.
How does senior management perceive you? Do they consider you a groundbreaking leader? Someone who is doing things that are beyond what your counterparts in other organizations are doing? Or are they not sure?
Every professional today has to work on their personal brand. They need to be building a legacy of above-and-beyond accomplishments so that their value is not so hard to recognize.
In recent years, several procurement leaders have gotten impressive, personal brand- building industry recognition – even cover stories in major trade publications – for their efforts in getting their teams certified. For example, Paul Sas, Supply Chain Director of Palomar Pomerado Health, and Bob Price, Director of Global Supply Chain for Kimball.
International, made the covers of recent issues of Supply & Demand Chain Executive Magazine for their teams’ results attributable to the SPSM® Certification.
Because of the profit-boosting potential of team certification that is being recognized and leveraged by progressive procurement leaders, the media covering the procurement profession has taken notice and has given positive attention to those leaders who have successfully led their team to new capabilities. Industry recognition in turn can lead to more senior management trust, thereby enabling procurement leaders to innovate and continually improve procurement performance.
Getting an entire procurement team certified is newsworthy and a way for procurement leaders to get the public recognition necessary for a strong personal brand.
While technology implementations are sexy and stretch goals are admirable, there is no substitute for capable people carrying out the mission of their leader. Getting a procurement team certified is an effective way of increasing a procurement department’s collective capabilities and obtaining benefits including:
- Improving internal perception
- Increasing return on investment
- Building a stronger team
- Earning increased supplier respect
- Securing industry recognition for leaders
With all of these benefits combined with the fact that such a large proportion of professionals in other disciplines earn certifications, is there any legitimate excuse why every member of your procurement team should not be certified?
About the Next Level Purchasing Association
Founded in the year 2000, the Next Level Purchasing Association (NLPA) is a leading provider of online training and purchasing certification. Its training, which includes the globally-recognized Senior Professional in Supply Management® (SPSM®) family of Certifications for world-class supply management success, has been pursued by procurement professionals and prestigious organizations in 160 countries throughout the world. With over 270,000 members, the NLPA is also the world’s largest professional purchasing association.
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