A famous quote goes along the lines of ‘managers manage and leaders lead.’
While many know how to manage, few know how to lead, much less what good leadership looks like. Broadly speaking, leaders guide teams through tough or difficult challenges. It differs in that respect to authority or management, which are about obtaining well-defined, orderly results through planning and/or instruction. Good leaders enable change and set the direction for that change. According to a paper from the Chartered Institute of Purchase and Supply, “leadership is more inductive and intuitive” than the instructive and planned approach of management. As with every business function, effective procurement leadership has specific challenges and nuances. With that in mind, we spoke to Michael Lewis, Professor of Operations and Supply Management at the University of Bath School of Management, about effective leadership for procurement professionals.
What differentiates leadership in a procurement setting?
Leadership within organisations is generally functional - it will be for most CPOs and Purchasing Managers. This means that leadership will be on a range of activities that are handed down by the board, which has the role of coordinating the organisation’s approach to business. “Those people generally have more responsibility than they have authority,” says Lewis. “They can’t make decisions that apply to the whole organisation – a CEO does that. “Functional leaders may be able to instruct their team, but will not be able to instruct other teams or the heads of other teams that are the same level of seniority. “So they have to work collaboratively; leadership we often assume to be one person leading the way, but it’s a far more collaborative construct. Your primary goal in that role is to build the kind of relationships with your colleagues that you build with your suppliers. “That idea of collaborative leadership is what marks out procurement leadership from the typical authoritarian management style. “As a procurement leader you have more responsibility than that, you’re being asked to deliver results, but you do not have the authority to deliver with resource or authority, so you have to persuade or cajole.”
Understand the importance of alignment
“In this scenario you won’t achieve corporate goals because you’re using a different functional strategy.” Horizontal alignment – the alignment of strategies between functions in the organisation – is equally important. This is very much collaborative; a good leader will facilitate this collaboration through good communication. “It is very easy in functional silos to think you’re aligned when you are not, simply by not getting out enough,” adds Lewis. “This emphasises the importance of communication in procurement leadership.”
Internal communication within your function is relatively easy because people will listen to you if, for example, you are the CPO. But are other functions likely to listen to you? “Not unless you build social capital and strong relationships,” says Lewis. “For external communication, getting out a lot is hugely important, and procurement people don’t get to see their suppliers as often as they should. They definitely don’t get out to see their colleagues as much as they should either.”
Alignment is critical to the success of all organisations and a good procurement leader will recognise that. Vertical alignment, that which comes from board level, dictates the overall strategy of the organisations and outlines the board’s expectations. “Misalignment here,” says Lewis, “can be profoundly dysfunctional. The board could be saying they want to use higher value products, or they want a shorter turn around time but the procurement team is working to lowest cost, reducing the number or suppliers, never using new and innovative suppliers.
Know where you are going
It’s profoundly important to understand where your department and organisation is going, says Lewis. This is for two reasons. “The right insight into a market or a value proposition can be transformative – you can make or lose money based on how good your insight into the market is. The second reason is that the direction of travel is a psychological phenomenon. “If you have a map and you believe it is the right map then people will follow and put in that extra 10%. If you have that then people will be willing to work together to achieve the overall goals. “Leaders instil that sense that they know where they and everyone else, is going. With that knowledge, even without the details, teams will feel confident and perform more effectively.”
Michael Lewis is Professor of Operations and Supply Management at the University of Bath School of Management. You can follow him on Twitter @OpsProf.