A procurement leader fought to move their function beyond cost-cutting by aligning with CEO and CFO priorities: EBIT, cash flow, and working capital. By framing procurement's value around total cost of ownership, speed to market, supply assurance, and supplier innovation, they earned a seat at the leadership table.
I asked the question to my CEO simply, I don't understand that. Why is everybody else sitting and I am not sitting? And, you know, they allude to the same point where they say, okay, you know, procurement is about savings. Sometimes we do not know the cost that you save, etc. Okay, yeah, I'm— I can be very argumentative. But, you know, it got me thinking and got me thinking about how do I put procurement at the forefront of delivering value to the company, not just the company, to the multiple stakeholders. But how to do it is first I understood from my boss, the CEO, you know, what is important for him. What's your strategy for this year and the next couple of years? What's the big deal? So, you know, we needed to start speaking the same language as everybody else in the business. EBIT was a big deal, you know, contributing to the EBIT. So for example, He had a target of, say, he wanted to contribute $10 per bag, for example, additional on EBIT. So in my thoughts, why am I not part of that? You know, how do I ensure that whatever I do contributes, you know, to the value of the multiple stakeholders? So I started looking at the critical things like how do I show that procurement was contributing to the bottom line, not just cost savings, but total cost of ownership? You know, how do I ensure that procurement was looking at the cash flow management? How am I contributing to that? The CFO would understand that. You know, the top line, I mean, I think somebody alluded to speed to market, which also helps you to gain market share, right? Supply assurance, which is what brings the customers to the company. You talked about innovation, joint value creation with my multiple suppliers? How do I ensure that I bring this to the fore? I mean, if you remember, 2019 to 2020 was also the COVID period, and I needed to show innovation that helps the business deliver its EBIT, working capital, brand protection, all of these major things that we do in procurement but we do not sell. We do not show how they relate to the bottom line, to the top line, which is the language that the business understands. You know, so I mean, I cut it short, but if you ask me today, yes, the answer is I, you know, I showed that and that procurement became part of the leadership team. Procurement started sitting on the table because they were able to see the value that procurement brought beyond savings.
