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How Do You Explain Procurement’s Fundamental Value to Senior Executives?

Several weeks ago, as part of an ACT-IAC Acquisition Management Shared Interest Group (SIG) meeting, I volunteered to help figure out how our SIG could address a suggestion that was made by one of our government advisory team. The suggestion was to take a look at what value a procurement organization brings to their enterprise and what that procurement organization could do to make their enterprise the very best it could be. The concept of procurement’s value has been discussed before in a number of forums, but many of the things listed seem to be too process-specific and, at least to me, may not have passed a senior executive’s “so what?” test.

So, let me present a scenario and encourage your ideas:

  1. You have to explain to a panel of very senior Federal executives (perhaps the political appointee level), who were never GS-1102’s or anything like that, what value your procurement shop provides to your Agency/Department. Your answers have to pass their “so what?” test since they are looking to eliminate non-value-add functions and staff from their organization. What would you tell them – what facts would you present –to make them go look somewhere else to cut? You want to leave them with the thought that they would be crazy to cut your shop.
  2. Additionally, what can a procurement organization do to help their Agency/Department be considered the very best it can be…and perhaps be considered a “best place to work.” Maybe you’ve actually taken steps to do this. Others in this community would benefit from any lessons-learned.
  3. If the ACT-IAC Acquisition Management SIG were to host some type of event this Spring or Summer to discuss the above, what type of event would be the most attractive/worthwhile: a panel session, executive breakfast, ½ day seminar with speakers, workshop, etc.?

Thanks in advance for the community’s input.

Regards and have a great week.

Pete

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I think there’s a couple pieces for an analogy. My friend has worked in purchasing in two top Fortune 100 companies and he’s had similar issues. In the end, he says they care about purchasing when they can save a lot of money or get a strategic advantage (think like Apple when they buy up all inventory of tablet glass ahead of time so takes competitors awhile to get going)

To me, procurement is much like the CHCO or CIO. When s/he is really good and forward thinking, they are seen as leaders that help the organization go to where they need to go. But often they end up in transactional, keep the lights on roles, where aren’t seen as strategic.

To get a seat at the table, I think procurement shops need to be strategic and forward thinking.

In the end, a good procurement shop is invaluable as it:

-Drives down costs

-Delivers the goods/services the organization needs for its mission faster and at higher quality
-Keeps you out of trouble

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Joe Williams

Senior executives tend to talk in terms of overarching mission, goals, objectives and purpose. Therefore, I suggest talking in those terms. As a previous commenter said, driving down costs and driving up quality are key reasons for having a procurement shop – tie those to the stated mission, goals, objectives and purpose. Identify specific cases.

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Jaime Gracia

The agency mission is to perform some function that serves the public, is some form or another. This mission is performed through contracts. To effectively manage mission, one needs to understand the contracting function and how it relates to the mission.

Too often contracting, and the 1102 workforce by proxy, are viewed and treated as low-value, administrative, paper-pushing entities and work. This is the opposite, and wrong-head view of the value this function has within an organization. If government wants to implement commercial best practices, it will realize that contracts are an essential mission-critical function to lower costs and improve efficiencies in the commercial sector.

I would recommend an event that includes organizations both from the private and public sector that understand this distinction. I would think this event would be illuminating to hear lessons learned, and more important, the cost savings achieved through focusing on contracts, and the contracting workforce.

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Peter G. Tuttle

Thanks for the input. I agree totally with all three commenters so far. Give the executive some red meat such as we saved so much $$, we kept you off the front page of the paper and we contributed to the organization’s goal by accomplishing such and such. Absolutely, specifics are necessary. Thanks again.

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Ron Falcone

Jaime makes a great point about the perception of Procurement and Contracting offices. They have too often been thought of as a back office transactional function when in fact it is a value added service provider. It should be veiwed as a strategic asset and integral to accomplsihing the mission.

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