If you are looking to get backing for your newly crafted sourcing strategy or investment for a new procurement project then you will need to convince senior management of the merits of your proposed plan of action. Providing them with detailed analysis and a powerful slide presentation that uses logic to build your case may work. More often than not, though, it does not. The reason is usually that you have appealed to the rational side of their brain but not tapped into the emotional half and it is this half that drives a lot of decision making. You can access the emotional side by tapping into the key areas that interest senior management. Here are five key things that interest them.
1. Return on investment. Senior management are tasked with the financial well-being of their organisations. This has two components – the amount of profit that they make and the value of the assets that they use to make that profit. The relationship between profit and asset value is the return on investment. As a procurement officer you can influence both of these. For example, if you make a cost saving then this increases the amount of profit and so the return on investment.
2. Time to market. In many markets new products are the lifeblood of organisations as the first to market gets the largest market share. This is particularly true where product lifecycles are short such as the automotive and computer industries. Showing, for example, how your sourcing strategy will result in suppliers and processes that result in early supplier involvement in product design and development will demonstrate how new products can get to market earlier.
3. Customer satisfaction. Acquiring new customers can be a costly business and so keeping existing customers loyal can be a key to increasing sales and reducing costs. Many organisations have now outsourced key parts of their operation and these suppliers have a direct connection with your customers. Demonstrating how your sourcing strategy will result in suppliers who have the capability to manage customer relationships on your behalf will get senior management interested.
4. Improving productivity. Productivity means increasing output for the same input or getting the same output as before but with less input. If your organisation can achieve this then the result is a better profit as you can either sell more with the same costs or reduce costs for the same level of sales. So, ask yourself how your proposal helps people to do their job better and build your case around that.
5. Managing risk. Risk can never be eliminated but it can be managed or mitigated. Often, senior management is unaware of risks that exist within their supply chains. Show them how your proposition can help to identify and then reduce this risk.