Procurement is know-how to deliver savings and additional value
Updated: May 4
Ms Barannikova has substantial track record of achievements in Strategic Procurement both with her employers (Metro Cash & Carry, Carlsberg, DIAGEO, etc) and in individual consulting practice. Catherine Barannikova is well-known for fast-track delivering of projects with positive impact to P&L and 360 degrees expertise in Procurement (public & private, global & local, in-house & outsourced, direct & indirect). Ms Barannikova has multiple professional publications, including the book “International Tenders”. Catherine Barannikova has 2 Master`s degrees in International Business and International Law.
Catherine, if you were to describe Procurement in one sentence to a person who doesn’t know what it is, how would you do that?
Procurement is know-how to deliver savings and additional value to a company via commercial acumen.
What are the most common Procurement mistakes your clients make?
The mistakes often belong to one or several of the following areas: a) structure of Procurement (on global level, category, etc), b) people management (roles and responsibilities, duplication of functions), c) matrix connectivity (influence and communications of Procurement with other functions), d) business processes (lack of agility and entrepreneurship, non-value-added activity), e) Procurement strategy and tactics (chaotic supplier management, monopolization of vendors, etc).
Let me provide you an example. In one of the recent projects with a large retailer the client had difficulty to track fact performance vs allocated investment budget for construction of shopping malls. Having analyzed the problem, I found out that investment budget cost centers and bid packages had mixed structure – notably, civil works mixed together with M&E. Economists tried to manually track the costs with incurring mistakes on the way and opening doors for violations (additional works, overspending).
I recommended to liaise bid packages with proper budget cost centers, which resulted in targeted tenders efficiency (only professional contractors started to participate in the tenders according to their specialty rather than a “team” of contractors and subcontractors with inflated price); reporting became transparent; preventive measures became possibly due to forecast accuracy.
What is the biggest Procurement challenge for startups?
I think ability to establish strong and efficient sourcing base. Many suppliers are reluctant to provide postpayment to newly established startups. Besides, startup cannot enjoy economy of scale and has to battle with burden of high prices and big (for them) minimum order quantities. This problem can be solved, if a startup can build long-term relationship with strategic suppliers and ability to influence them, prove that there are benefits in business collaboration. Of course, it`s worth investigating creative solutions: maybe a startup participates in the accelerator of a large FMCG company and strong suppliers can be sourced with support of that FMCG company; maybe a startup has unique business process which quadruples efficiency and this business process can be shared with suppliers in return to better pricing; maybe several startups can unite their sourcing needs in one tender. And etc and etc.
How important is communication skill in Procurement profession?
It`s absolutely paramount. Procurement professionals communicate between each other (when communication has problems, 2 buyers can purchase the same staff at different terms causing inefficiency to their employer). Surely Procurement professionals communicate with their internal stakeholders and cross-functions, global and local procurement colleagues. If such communication is not inclusive, procurement projects can be not supported and become obsolete as being far away of corporate strategy and goals. And Procurement people communicate with suppliers, contractors, designers, agencies and other external parties. If such communication is not efficient it ruins deals, performance and can even damage corporate reputation (breach of confidentiality, incorrect communication to the market, etc).
What would you advise to Procurement beginners?
As many operations are and will be automated in digital economy, Procurement beginners should always be open for learning, creative thinking, flexibility and strengthening of soft skills (emotional intelligence, influencing). Search for new efficient solutions, develop great ideas, challenge status quo and learn, learn, learn. Actually it`s applicable not only to Procurement beginners, but also to established professionals.