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AOP Blog

Connecting Procurement Performance with Company Growth

By February 17, 2021No Comments

At AOP Mastermind LIVE in October, we asked CPOs about their top objectives heading into 2021. The number two objective named was company growth, something procurement has talked about a lot as a profession, but which we have struggled to actually achieve. 

How can procurement actually impact growth? The most obvious ways are by helping our companies buy the materials, the products, and the services they need to grow. We help put in place the infrastructure required for growth.

Secondly, the cost savings we create can be reinvested back into the business. That might be increased dollars for a marketing budget or the option to hire more employees. Those are the most traditional ways we support growth, but what if procurement wants to go beyond that?

In that case, procurement probably needs to start by having a conversation with the head of sales or the head of marketing. We need to know why customers buy from us over our competition. We also need to be familiar with the feedback that the sales and marketing teams actually hear from the market. 

If they are trying to overcome price objections, then the cost savings procurement may already be driving is key. But maybe your company’s products and services are seen as being more innovative. Perhaps diversity or sustainability is particularly important, and your company lives out those goals through corporate actions. Maybe your company has made a commitment to customer service or your customers think you do a better job of protecting them against risk than your competitors.

This understanding will give procurement a better understanding of which approaches can actually help the sales and marketing teams grow the top line in a way that goes beyond traditional cost savings. 

Here’s an example to demonstrate the point. I recently spoke with the CPO of a telecommunications firm. One of the primary factors driving their customers is how the telco firm manages risk. 

The CPO invests in technology that helps procurement proactively monitor supply chain and supply-related risks across the world. They don’t just look at first tier suppliers, but tier two and tier three suppliers. They have an app-based dashboard that shows risks in real-time. They share that with the sales team so that – in real-time – by showing a prospective customer the app, they can show the level of risk monitoring that goes on. 

This company has found this to be a really effective way of overcoming risk-based objections and positioning themselves against their competition. 

Many of the ways procurement can support growth might not be obvious, but they do go beyond the traditional cost savings approach. Once you discover what those opportunities are for your company, based on feedback from your sales and marketing teams, it will be that much easier for procurement to measurably contribute to corporate growth.