Both Procurement and Sales need to have a good grasp of the customers strategy;
one side to make sure they are addressing the core needs of their customers strategy,
the other to make sure they are servicing the needs of that strategy.
So, here is the issue; getting to the working parts of a company strategy is less
easy than it should be. There are often grand statements and visions, obscure references
or detail of simple change programs. Although these items can help us understand,
there is often a gap between the statements and the real strategy. Often, the key
statements being made by executives about strategy fail to be linked closely into
more day to day activity.
This means that both sales and procurement need to spend some time exploring what
their customer is aiming to achieve at a high level, and look for the alignment or
contribution that a particular area of sales or spend will be able to deliver.
Clearly, in some areas, the links can be tenuous. As a simple example, where businesses
are acquiring office supplies, it can be hard to see the links to strategy. However,
even here, it is possible to find links to CSR statements and targets and show linkage
in those areas. In other areas, linkages can be far more specific. Where a business
is seeking to extend its ability to innovate, and deliver innovation to customers,
identifying the way the specific category contributes to that strategic intent can
focus both the way in which the procurement activity works, and the approach to a
However, there are often several areas within an overall company strategy, not all
of which have the same weight at the same time. This suggests that we also need to
judge which areas to prioritise and which may be reasonably ignored. If we talk to
stakeholders inside the business, we will get different views of the importance of
various areas; a consolidated view is often hard to come across, but testing and
challenging this hierarchy is significant.
What can we do if we have a good view of actual company strategy? From a procurement
direction, there is an opportunity to structure business requirements to reflect
key elements of strategy. This can move procurement rapidly from tactical activity
to a more strategic delivery. From a sales perspective, we can start to target sales
linked to the core business issues, rather than a tactical sale. In both cases, this
is going to lead to more in depth and longer term approaches ( as much as is possible
in the particular area) which can lead to extended delivery of benefit for both sides.
There are dangers in the approach. In organisations with limited development of
strategy, changes in direction are a risk. In areas where strategy is emergent (which
I translate as based on what we’re doing), there is risk of correction and change
as the strategy evolves. However, there is also a likelihood in these cases that
strong intervention from either side can firm and inform strategic direction, so
the risk is worth taking.
Start out by seeking and clarifying the key areas of strategic intent, and match
those to any targets for delivery over time. From here, map the way in which the
strategy can be influenced by either the category of purchase or the product/ service
If we can do that, then we can ensure that we have tight alignment, which gives
a far stronger foundation for the sale or purchase activity.