Tips on increasing the value of a procurement manager in a company

Online magazine "Financial Director"

Shareholders and top-managers tend to underestimate the role of procurement, considering it to be purely a cost-center. As a result, the average salary of a qualified specialist in procurement usually does not exceed USD 2500, and CPO of a major company – USD 5000. Meanwhile the salary of managers in marketing, IT and sales might be more than USD 6000-80001.

Based on personal experience and cases from practice of colleagues and members of professional communities at Linkedin and Facebook, I have identified 10 proven methods, which might help a procurement manager to earn more.

1. Occupy your own niche

There are many procurement specialists on the job market, but it is not always easy to find experts with strong expertise in product categories. In order to become an owner of unique professional competence in a certain category, as compared to a specialist in paperwork or an obstacle between business and suppliers, improve your expertise in categories, study the market, think strategically and find out how to negotiate with suppliers on an equal footing.

Get focused on the key procurement groups for your business: for example, production/commercial equipment, IT, logistics and marketing services. They provide effective output and attract more attention from the management. It is more likely that your work will be noticed. Outsource minor non-strategic categories (mobile services, office supplies, courier services etc.) or decrease their priority.

Real-life experience

Being employed by АВ Inbev I managed to become an expert in IT and consulting categories, which had not been the subject of procurement in the company previously. Soon I was appointed as category manager for IT, telecom and consulting services and became responsible for all procurement activities in the Eastern Europe zone. These categories provided for more than a half of all savings in indirect procurement, therefore my value for the company became undeniable.

2. Be proactive

What about creating your dream job yourself? Initiate the new project yourself instead of waiting for it to happen. Constantly analyze business processes in which you participate, search for the ways to optimize them and, if you see opportunities for improvement, offer them to the management, indicating potential benefits, ways to achieve them and defining tasks that you can perform. This is a good opportunity to be at the root of the project and become its leader.

Real-life experience

While implementing SAP for procurement at AB Inbev, I noticed that purchasing activities were “scattered” throughout the company and affected hundreds of people in different departments, for whom procurement was of marginal significance. The necessity of training them to use the procurement module, as well as the high risk of neglecting the rules of “non-core” activities, would have complicated SAP implementation.

I managed to promote the idea of assigning this functionality to a dedicated group of employees and I took the lead on coordinating their current operations while remaining the project implementation leader. By the time the project was implemented, a group of 55 people was transformed into a separate service, and I was appointed as its manager.

3. Focus on significant projects

An important quality of a procurement manager is being customer-oriented with internal customers. A professional should be able to balance the immediate satisfaction of business units’ requirements and the company’s interests in terms of cost and workflow.

In order to have everything done, concentrate on strategic projects, for example, reorganization of purchases, introduction of new processes and automated systems. Strive to get into projects supervised by top management directly. The management, like the rest of the staff, have certain tasks, usually represented in the form of KPIs and company goals. Try to keep abreast of these goals, to think in the language of business, top management and shareholders. If you see that the result will help your internal clients achieve their KPIs — get down to business without hesitation.

Real-life experience

Alexey Kosulin, currently a Project Manager at PrECA, shares a case from his experience at Tele2. Participating as a procurement manager, in a project supervised by the CEO, he demonstrated his worth by solving a number of tricky situations, some of which were not directly associated with procurement, but were related to resolution of a conflict with an important supplier. After the CEO moved to another company, Alexey was invited to his team with a significant promotion.

4. Get cross-functional experience

A procurement manager has to be aware of how the production process is organized, as well as the way finances, sales, and supply chain management function. To avoid being considered a theorizer and get comprehensive understanding of the company’s business, find out about the specifics of the related departments, and it is even better to work in them for a while. This would let you better understand the needs of internal customers, it would increase communication efficiency with the departments and the suppliers and, as a result, it helps to gain a reputation of a professional and open opportunities for career growth. It is a mandatory experience for a CPO or a COO, aspiring to become a CEO eventually.

Real-life experience

I am aware of ‘special cases’ in international companies when a procurement manager with unique expertise became a universal consultant in a product category or an analyst on process optimization instead of being just a tender organizer. Such an internal consultant, for example, can help HR compare compensation schemes for employees, or map optimal routes for the logistics department.

5. Open up new horizons

Do not miss opportunities of internship, business trips, temporary work in business units in another country, or even better — at the company’s head office. Participate in global projects. Consider it an opportunity to gain new experience, learn the best practices of the industry and a chance to prove yourself.

Real-life experience

During my work at Agrega, I happened to participate in the procurement optimization project for mobile communications at the UK head office. The project turned out an excellent opportunity to learn the methods and best practices of European colleagues, to further explore the mobile communications market, and gain global experience.

Anatoly Tsypkaykin, Co-founder and a Project Manager at PrECA, moved to another city for several months as part of the ERP system implementation at AB Inbev in 2007, in order to get trained and join the project of process implementation at the head office. “I decided that that was an excellent opportunity to get unique experience, get acquainted with procurement and automation experts and open up new perspectives. And I was not wrong — one year later I was invited to the position of a category manager at the company’s head office.”

Alexey Kosulin, currently a Project Manager at PrECA, while working for Tele2, was involved in a number of international projects on selecting suppliers for the entire group of companies. This allowed him to get acquainted with procurement organization at the head office in Sweden, learn the work style of foreign colleagues and use it to organize the process in Russia.

6. Upgrade your skills

Take part in specialized trainings, seminars, and certification sessions on a regular basis. Depending on the objectives, these may be activities aimed at developing new competencies and structuring existing knowledge (for example, CIPS, курс MIT по SCM, ACCA MBA), foreign language proficiency exams (IELTS, TOEFL, etc.) or studying the industry specifics of the company. The online education platforms (EDx, Udemy, Coursera) allow you to obtain the necessary skills in a convenient concentrated format for reasonable money or even for free.

If you know a good expert among colleagues, ask them to conduct a personal training just for you. It might be another procurement manager or an internal customer having a good command of the category that you want to master. The acquired knowledge is best solidified by implementing the relevant project independently. After its completion, ask for feedback from the customers, stakeholders, suppliers and your supervisor; they will prompt you on what can be done better next time.

7. Study new technologies

Companies often realize the need to automate procurement or upgrade the existing IT systems. Become an expert not only in procurement, but also in state-of-the-art technology used for its automation. Study electronic trading platforms, e-sourcing systems, e-procurement, SRM, etc. Do not wait until the idea comes from the management — you can offer the optimal solution yourself and try to lead the project.

Real-life experience

Working at AB Inbev I managed to implement SAP ERP and SRM Procurement module, for the head office and 10 plants. As a result, the procurement management process became convenient and transparent, reporting and analytics improved and became more informative with less labor and time required. As a result, not only my colleagues, but also the management, began to see me as the driver of changes.

Anatoly Tsypkaykin, Co-founder and Project Manager at PrECA, recounted how, back in 2000 when he was hired by the procurement department at one of the production sites of AB Inbev, he noticed that employees used MS Office tools only for the simplest operations (like writing a memo or maintaining a supply register). Preparation of a monthly procurement report could take up to 2-3 days. He helped his colleagues combine balances, consumption rates and production schedules for the next month in one report and automate filling out of purchase orders for raw and consumable materials with the help of Excel. The time of the report preparation reduced to 1 hour. In fact, this was the first MRP planning tool at the plant, and Anatoly was appointed responsible for procurement department reporting.

8. Speak up about your achievements

Internal and external publicity are both important for building your personal brand and promoting the image of an expert. Use various occasions to inform the management on the results achieved, support your words with figures. Participate in conferences and round tables as a speaker (for example, Quorum, AH Conferences, RBC, Moscow Times). Speak about the implemented cases on the company’s corporate blog, publish articles and interviews on procurement related resources, and be active in professional communities such as Linkedin and Facebook. This will help to make useful acquaintances and establish business contacts in related areas.

9. Do not hesitate to talk about money

If you already have unique skills and competencies, implemented a significant project, have leadership qualities — then it’s time to discuss the salary bump with the management. Be persuasive, argue your position.
Perhaps the manager understands your value, but, for some objective reasons, a salary increase at the moment is out of the question. If that’s the case, consider compromise options. For example, in small companies with a flexible system of motivation, you can offer a system of payment with a lower amount of fixed compensation and a high bonus, depending on the results achieved.

10. Look for opportunities elsewhere

If the growth opportunities inside the company are exhausted, pay attention to the external market. Experience in a major company with a well-established procurement system will be useful for smaller companies, where procurement processes are not yet well established and expertise and experience in optimizing procurement processes are required.

Another option is to be your own boss — become a freelancer, a consultant or start your own procurement company. But be patient and be ready to build the brand, create a reputation, compete with your own staff and get real-life experience.


 

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