Quest for alignment
From the December 2018 print edition
If you’ve ever driven down the road with wheel that aren’t aligned and taken your hand off the wheel for a moment, you’ll notice the vehicle drifts to one side. Travel too long without realigning, and you could end up with a far costlier problem. In the same way a vehicle’s alignment problem will worsen over time if not addressed, procurement must sync regularly with members of the finance team to ensure alignment on long term vision and short-term goals. While the finance department may serve different functions at every company, their core is usually to manage money, remove risk, and grow the company. The good news is those core functions are exactly what procurement professionals all around the world are focused on! How can procurement improve interactions with Finance, and what steps can you take to settle on a “value alignment?”
Align and eliminate
I’ve been fortunate to work for many years building new procurement departments at rapidly growing companies. I want to note that in each case, finance were the ones who recognized the need for the procurement function and hired me. The relationship is seen as important from different perspectives. If you are starting in a new role or seeking to transform the procurement position at your current company, step one is to align on purpose and eliminate misunderstandings. It’s never a bad time to sit down with a CFO, controller, AP leadership, and other invested parties in finance to clearly state your purpose as a procurement practitioner. One of my early mistakes was being too fluid and accepting preconceived notions of what procurement was supposed to be based on someone’s past experience. You know what’s best for the company from procurement’s perspective – drive that focus as early as possible to set expectations.
Empathy in practice
Empathy is a misunderstood and underrepresented quality in both Finance and Procurement who are often seen as strict gatekeepers. Do you understand what your Finance team cares about? Could you clearly communicate your Finance Team’s goals and vision to a stakeholder? Could they do the same for you? If the answer is no, your communication may be lacking. Empathy in practice means:
- Learning Finance’s language. Take some time to learn key phrases and terms related to financial work. Hard to fit in if you don’t speak the same language.
- Communicate constantly, and face to face as often as possible. This should be communication with a purpose, if you take, expect to give back.
- Prove how your work impacts and mirrors Finance’s own work in progress. Finance cares about profit, procurement should be considered a profit center and will be if you can report and redirect money saved.
Market yourself to finance
A study published by Redshift on behalf of WaxDigital on July 14, 2015 found that 66 per cent of the 200 finance executives surveyed found procurement to be a hindrance to regular business processes. This is alarming, particularly because many procurement departments currently report through finance. I believe there is a simple reason for this – lack of education. If you asked most stakeholders what the primary function of procurement is they would respond with “cost savings” and leave it at that. While this is true, there is so much more that procurement can offer to finance in terms of risk mitigation, collaborative technology use (think source to pay, there is a clear transition there from procurement to AP), stakeholder management, and process improvement.
Preach your value! Let Finance in on your KPIs and tie your goals to theirs. If their goals aren’t linked directly to broader corporate goals as yours should be, don’t be afraid to speak up. Take the initiative to educate upper Finance management on your role, if you avoid this discussion you’ll find that the direction you’re headed may not be aligned with Finance’s path. That same study found that 46 per cent of procurement professionals surveyed claimed to have a good relationship with finance, while only 22 per cent of finance said the same regarding procurement. That demands a shift in procurement’s efforts to focus more time on marketing their function and educating finance.
Be patient and creative
The reality of the modern procurement function is that it’s a deeply varied across industries and companies, a constantly shifting role in terms of priorities and directives. Procurement’s demands in terms of stakeholder management can be steep, but finance should be at the very core of the groups you seek to collaborate with. The value in aligning with finance is their broad, high level understanding of the business and the impact that can have on your savings results. If Finance is the brain of a company, you can be the hands carrying out business critical tasks. Alignment takes time, but the result is a seamless front of finance and procurement growing a business’s bottom line, improving process and policy, and protecting against risk for a healthy and successful business.