Budget Planning: 3 Reasons Why Procurement Should Attend Budget Review Meetings
Thursday, 15 Dec 2016
Holiday parties are not the only activities happening around this time of year when the phrase “the more the merrier” rings true. The same can be said about budget review meetings as organizers think about who should attend these sessions. Often, CPOs and Procurement professionals don’t have a seat at the table – but they should. We learned why in a recent podcast on budget planning with Buyers Meeting Point.
As we say time and again, collaboration is critical to any purchase-to-pay (P2P) initiative, and we learned in this podcast that there are numerous benefits to beginning this collaboration during the budget planning process long before projects kick off. During the discussion, Buyers Meeting Point Editor Kelly Barner and Basware’s Bob Cohen defined 3 reasons why Procurement should be invited to the budget planning party as an integral part of enterprise budget management.
“There’s a better way to [plan budgets] by inviting other parts of the organization into the budgeting review and planning process, and by that we mean the CPO and the whole procurement organization,” Cohen said during the podcast.
You’ll have to listen to the podcast to get all the key takeaways, but here’s a quick re-cap. Procurement should attend budget reviews to:
- Learn critical information: Budget planning and review meetings offer opportunities for the procurement department to interact with other departments. This interaction helps Procurement learn about other departments’ needs that may require major sourcing, new suppliers, building on existing contracts, and other project components. Knowing this information upfront helps Procurement plan and manage resources more effectively as well as ensure other departments get the best support for projects. Discussions may also indicate additional areas needing more spend management and increased visibility. Even potential risks in the supply chain may come to light, giving the procurement department critical insight for mitigation.
- Provide customer service: Learning critical information during these meetings and understanding more about the daily work lives of requestors and approvers empowers Procurement to improve processes, lean activities, and better tailor technology for end users – ultimately making everyone’s lives easier. This helps foster collaborative e-procurement – an approach we call WeProcurementTM. Other departments easily get the items they need to do their jobs, be more efficient, and meet goals, and Procurement better understands their internal stakeholders for continued improvement of workflows, budgeting activities and e-procurement solutions.
- Offer consultative support: Procurement has expertise that can help grow the organization without drastically increasing departmental budgets. The procurement team understands the supply chain – they know how to save additional costs and extract more value by building and leveraging closer supplier relationships, negotiating better payment terms, and locating new suppliers with better rates. These meetings enable Procurement experts to collaborate with other departments to maximize budgets and fund other initiatives by saving money on the goods and services they are ordering. Imagine if others across the organization thought, Procurement to the rescue!
“There’s actually quite a few opportunities for collaboration and good conversation, and relationship building that come out of the budgetary process,” Barner states as the podcast ends.
Not only do the finance team and other departments benefit from the knowledge and experience of the procurement department, Procurement also taps into new opportunities to strengthen relationships with suppliers, while building a positive brand for Procurement within their organization. Instead of being viewed as the compliance police, Procurement becomes a trusted business partner, and in the end, everyone wins.