We are on the cusp of a once-in-a-lifetime recession. Lockdown is the calm before the eventual storm.
It is unlikely that it will be as immediate and sudden a change like how the introduction of lockdown measures instantly changed our lives, but make no mistake, we’re in for a very nasty economic contraction.
How well you survive it and come out at the other end is going to depend on how nimble and agile your organisation is. Larger companies have more resources, usually pay the best salaries and are able to attract the top talent. The problem is, these A-players working for you often get suffocated by all the corporate bureaucracy and unnecessary red tape, which means they fall short of realising their full potential.
Now, more than ever, if you’re going to beat more agile and leaner competitors who have lower overheads and can make decisions faster than you can, slaying the bureaucratic dragon is no longer something you can ignore.
You can’t keep swimming with the current and accepting corporate red tape and inefficiency as an inevitability like death and taxes. Getting rid of unnecessary bureaucracy, and taking non-value added processes away from Procurement Category Managers, must become a top priority.
Eliminating “work for work’s sake”
Tim Ferriss’s classic 2007 book “The 4 Hour Work Week” is a bible for all aspiring digital nomads and entrepreneurs who want to take control of their lives and free themselves of the corporate grind. Maximising productivity, and the freedom to outsource non-essential work to third parties, is a major topic in his book.
A cornerstone of this is the concept of eliminating what he calls “work for work’s sake”. Also known as “busy work,” this is typically low-level but necessary administrative work that takes up a lot of time but has little or no added value.
In the procurement space, this is tactical buying, firefighting day-to-day operational issues or box-ticking exercises that are there to fulfil internal compliance requirements.
Are your Category Managers who are on £65k a year having to submit ridiculous documents like travel requests, change of payment terms forms or catering requirements for meetings?
Let’s take travel requests as a prime example of corporate waste. Your category managers aren’t your teenage kids going on Amazon with your credit card, so don’t treat them like it. Yes, you have a budget to manage. But should you really be degrading highly skilled knowledge workers by forcing them to justify why they’re volunteering to give up their Sunday evening with their family to instead spend it on a red-eye intercontinental flight?
Likewise, you should also give them the tools to manage simple commercial decisions like payment terms requests. If a supplier is insisting on 30 days’ terms rather than the corporate standard of net 60 or net 90, a mid-senior level manager surely has the intelligence and judgement to make the right call.
These should either be eliminated or completed by an admin assistant. Every hour you force a team member to deal with “busy work” red tape issues is an hour they’re not spending on delivering their savings targets or working on innovations with their supply base and stakeholders.
If you’re insisting on these policies, then you don’t run an efficient, highly productive team. It’s really that simple.
Hire someone more junior on half the salary if you want to exert this level of control. I use the word control, but what I really mean here is micromanagement andI’m being polite. Alternatively, hire a couple of purchase admin team members to manage your internal bureaucracy. Sales teams have admin assistants for good reason.
Are you a preferred customer?
Most sales and business development executives will categorise sales leads as A, B and C based on how warm the lead is and how attractive the customer or amount of business could be to them.
What you probably didn’t know is that most companies will also use this same categorisation for their existing customers.
If you’re a B or a C customer, or even if you’re an A customer, if you’re difficult to do business with, then you’re not going to be a preferred customer.
When I talk about ease of doing business, I’m not referring to how hard you are on your supply base when it comes to nailing them on price and squeezing their margins.
I’m talking more about how easy it is for suppliers to deal with you, at all levels of the business. Do your Category Managers never answer suppliers’ emails or requests for meetings because their workload is too high? Does it take weeks to change something simple like a VAT number in a vendor master record, or to get a contract or pricing agreement signed? Are you constantly paying late because you’ve outsourced your accounts department or your P2P process is a mess.
The easiest way to establish this is to send them a simple survey to understand what they see as your strengths and weaknesses. You’ll be surprised how many are willing to give you constructive feedback, especially if it’s anonymous.
Do your internal controls really add value?
Internal functions that are overheads rather than revenue contributors need to justify their existence. This is often in the form of unnecessary red tape which they force onto other departments’ workload.
Let’s not beat around the bush here. I’m talking about the likes of IT, Legal, HR and Internal Audit. They rarely add to a company’s bottom line and as such have to show that they’re indispensable, usually by citing some or other legislative requirement or budgetary constraint and then coming up with a rather draconian policy to vindicate it.
Do your team members need to jump through hoops to book a flight? Or to use VPN to access the company network from home? Do they need to justify why their mobile phone bill is £20 higher than last month? What if they have minor (non-legal) amendments to a contract approved? What do they need to do to obtain approval for not following competitive bidding rules?
If so, then something is wrong.
Do you need controls in place? Of course. Should the process be that bureaucratic that it requires a level of sign-off or documentation that means it takes up more than one hour, end-to-end?
No. If it does, then the tail is wagging the dog. These processes need to be pushed back onto the departments who are enforcing this level of compliance. They’re impacting your ability to deliver results with the headcount you have in your team.
Workload-heavy admin tasks? automate or outsource them
There will always be some tasks which can’t be eliminated and are still considered necessities. Even if they are long-winded or admin heavy, they need to be done. Some of this will still fall into the responsibilities of your core procurement team.
Digital transformation is something of a buzzword at the moment. But before considering what areas of your processes can be digitised or automated, you need to first consider what activities your procurement team spend the most time on.
Automating vendor payment enquiries doesn’t make sense if you have an efficient AP process and procurement isn’t frequently dragged into resolving AP issues. Likewise, having an expensive piece of risk management or contract administration software isn’t going to be a priority if most of your suppliers are local and your biggest transactional time suck is the time it takes to go out and get 3 quotes for one-time, non-repeatable project spend or capital investments.
Does it even make sense to invest in software? Or is it instead a more cost-effective solution to outsource some of your day-to-day tactical buying and compliance box-ticking to a third-party BPO, or to set up a tactical buying office in a lower cost country that can functionally report to individual category managers and perform some Junior Buyer tasks at a fraction of the cost?
The result in terms of positive impact on category managers’ administrative workload is still the same.
