HRD's pocket guide to... procurement
September's pocket guide will help you obtain the facts on procurement
Why do I need to know about it?
Procurement and HR can have a lot in common, and should be able to find shared ground when it comes to the people aspect. After all, doesn’t HR ‘procure’ employees for the business, while procurement often deals with the many people involved in supply chains?
“HR professionals need to realise that almost every procurement decision has a people impact. This could be a change of supplier, a new ordering process, new products to understand or a new account manager to interact with,” explains Andrew Stephenson, group people director at Lookers. “Procurement can also be a major insight into the culture of an organisation; a real understanding of ‘how things work here’ can come from how people buy things in your business.”
Peter Bloom, senior lecturer in organisation studies at the Open University’s Business School, also points out the cultural aspect. “HR professionals must be aware about procurement as it helps them to understand what is being valued and why. For instance, perhaps a firm is willing to spend more on procuring higher-quality materials or services. This reflects the culture of the organisation and potentially has a direct impact on its human side. This could mean that expertise and experience are being valued over cost savings.”
Lookers’ head of strategic purchasing, Derek Parry says: “Many people assume procurement focuses only on the lowest price, which is not always the case. When looking at suppliers it is often equally as important that you factor in the people impact – how will this supplier interact with my colleagues? Are they a good cultural fit for my business? Will this improve the experience of my colleagues through increased service levels?”
What do I need to know?
It is vital for HR to understand how the procurement process is changing to fit into a modern world and evolving working practices. “The conventional procurement firm that sought to procure goods and services has transformed into a ‘strategic sourcing organisation’,” says Bloom. “Whereas procurement concentrates primarily on day-to-day purchases, strategic sourcing focuses on the medium- and long-term value of supply chains.”
The most obvious opportunity for HR and procurement to work together is in recruitment. But procurement’s expertise can be under-utilised by HR. “Procurement professionals are experts in contract management, which is a key part of recruitment. They can help in the strategic sourcing of individuals,” says Andrew Coulcher, director of membership and knowledge at the Chartered Institute of Procurement & Supply (CIPS). “Procurement can act as the first port of call when liaising with prospective third parties.”
Where can HR add value?
There is ample opportunity for HR to add value to procurement. “Colleague engagement is one area procurement and HR could partner on. Aligning the people challenges we have as a business to sourcing strategies would result in better acceptance from colleagues of any changes,” says Parry. “Equally, HR are ideally positioned to enlighten new starters about my role and how it affects the business and their role.”
By working together the functions can implement solutions that benefit the business and its people. “Procurement can often be entirely focused on the price they are able to achieve. While this is important they can achieve bigger results with HR’s involvement,” adds Stephenson. “If the end result is something people believe in then embedding a change can be easier.”
“HR professionals are adept at those softer skills procurement is not known for. Although procurement professionals are developing these skills more they could learn from HR on best practice and how to develop stronger relationships,” concurs CIPS’ Coulcher.
With heightened scrutiny of late on supply chain transparency and exploitative labour practices – as a result of the Modern Slavery Act and Taylor Review, for example – there is a clear business and, crucially, ethical case for partnering on ensuring responsible supply chains. “While procurement professionals are often focused on the cost benefits of one supplier over another, HR can offer a different perspective highlighting the strategic and ethical importance of sourcing goods and services that promote strong labour practices and are ecologically sound,” says Bloom.
Ensuring each are aware of the other’s upcoming projects and aims will ensure the most productive relationship, adds Stephenson.