The Importance of Communicating Procurement Strategy

By Ravisekharan Jayakumar, CPSM

As organizations are becoming more global and procurement is transforming into a more strategic field, it is imperative — now more than ever — to formulate robust category sourcing strategies that align with the company’s goal tree, as well as efficiently communicate the strategies to a broader organization.

In spite of (1) organizations adopting a global approach to business and (2) the increase in cross-functional interaction among different functions, the mindset to work in silos is still prevalent in some companies. Functional goal trees are inspired and developed from a company’s vision, mission and value statements. However, it is natural to formulate conflicting goal tree initiatives among different functions within the organization.

This can result in a value-adding project branching from a procurement goal tree, for example, not getting required traction and priority at the manufacturing function, thanks to manufacturing having different priorities from its own goal tree. From a sourcing manager’s perspective, this project could have brought much value to the organization. However, insufficient cross-functional communication and misaligned goals and targets between functions can cause the project to be unimplemented or delayed — and the organization standing to lose the value that it could have attained.

In Fortune 500 organizations, the corporate procurement function holds an annual strategizing event. In this week-long brainstorming session, different purchasing and product category sourcing teams within the global organization present their category strategies to the broader organization. In some companies, such strategy sessions are limited to procurement professionals. But such events require much wider inter-functional participation in order to enhance cross-functional synergy.

In any organization, internal stakeholders are just as important as end customers and supplier partners. Most, if not all, project ideas that branch out of procurement’s category sourcing strategies need involvement of cross-functional teams consisting of, but not limited to, engineering, marketing, manufacturing, customer service and logistics. In order for a procurement organization to succeed, it is of vital importance to communicate the ideology behind its category sourcing strategies to internal stakeholders.

Ravisekharan Jayakumar, CPSM, is sourcing manager at Cummins Inc., a Columbus, Indiana-based manufacturer of engines, filtration and power-generation products. He is based in Nashville, Tennessee.