As redundant as this sounds, procurement tends to be rather tactical in nature, largely due to what the job entails — inquiry, negotiation and transactional orders.
However, seldom is real progressive work achieved, and if it is, it is rare to see any documentation on this. So, are the department’s personnel going to continue doing what they currently do, or is there something different that can be done to take the function to the next level?
The challenge procurement has is best described as ‘lack of diversity’, and this lies in three points. Background diversity, where most purchasing personnel lack experiences from other industries, which limits practical knowledge; a lack of geographical experience — largely limited to the GCC— in comparison to other functions that boast international experience; and thirdly, gender and ethnic diversity of procurement personnel.
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As a result, most buyers in the industry have a homogenous approach to targeting expenditure. It is said that one needs to master the rules before they are reinvented. The mastering of rules comes in the form of contracts, compliance and ensuring smooth operations, while maintaining costs.
Reinvention would be optimising operational effectiveness and enhancing efficiency levels, such as simplification, product utilisation and measurement of ROI as a whole. This is achieved by understanding spend through extensive spend analysis, followed by an end-to-end process/operations analysis.
After that, tools can be developed such as consolidation or outsourcing of operations, leading to a transformation of costs from fixed to variable, and more in line with revenues based on occupancy and food & beverage.
Other ideas would be to move capital expenses, including cost of operation and depreciation (ownership) to a more fluid operational expense based on rental and outsourcing that is again driven by occupancy and F&B. Examples that come to mind include laundry, or perhaps outsourcing tasks that can be charged on a transactional basis rather than an hourly base cost structure.
Procurement can be an exciting function to work in, and there are several managers that stand out today in calibre, professionalism and results. When it comes to achieving meaningful work, the common denominator is striving for improvement — the sort of work culture that is nurtured in multinational companies (“deal with the company resources as if they were you own”).
By changing procurement tasks from transactional to analytical, and then strategic, the whole department’s results can really be taken to the next level. It is then that the work achieved will be too good to be ignored.
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