The Importance of Cross-Functional Communication in Purchasing
“There’s no I in team.” A simple mantra that has been used for years to support the importance of collaboration throughout many aspects of life. This statement holds true in the procurement space as well, both internally and externally to the business function. All members of a purchasing organization need to be in coordination for the team to create efficiency and cost savings. But, this communication shouldn’t be isolated to the singular functional team. In order for a company to create the most efficiency and the most cost savings, procurement leaders must be in constant communication with team members from finance, operations, accounting, legal, etc. For example, let’s say your marketing department is looking to run a sale on an item next month. This will, in turn, increase sales by 10%. To be able to match the peaking demand, buyers need to increase order quantities for the BOM.
Tactics to Increase Visibility
- Recurring meetings with individuals at all levels. It is especially important for key decision makers to have a clear line of sight to other functional strategies, but it can be very helpful for that visibility to be passed down to lower level employees too. Although the day to day activities of each employee may not have great cross-functional impact, it is important for all workers to understand the inter-connectivity of the business.
- Share real time performance metrics. Going one step further than a meeting, it can be smart to create dashboards or KPIs that are shared cross-functionally. This data will allow individuals to make more informed decisions or raise red flags to areas of concern.
- Alignment of performance incentives and KPI’s. If you can ensure the whole organization is working towards the same goals, it will be that much easier to guarantee functional connectivity. Let’s take Procurement and Finance, for example. Take time to outline quarterly category spend budgets that match up in both departments to keep costs at an efficient level.
Benefits to Increased Visibility
- Disaster avoidance. The benefits of cross-functional communication won’t always bloom into a measurable impact. Sometimes evading errors can cause just as great of an impact as a improving performance.
- Long term cost efficiencies. Cross-functional teams can generate many cost cutting effects, including: minimizing rework, strategizing for the long term, consolidation of administrative activities, and improved customer satisfaction.
- Varying perspective. SMEs, although great at a given subject, can always benefit from outside opinions. A procurement professional may be so focused on a core set of purchasing objectives that they neglect the negative impact these goals may have elsewhere in the business.
So remember, “There’s no I in team.” It can be easy to forget the simple things in life and the same holds true for your procurement organization. The next time you’re looking to make a key decision, think to yourself, how could this effect the greater organization?