I knew something wasn’t quite right before we’d even opened the first spreadsheet.

It wasn’t because anyone complained about suppliers. Nobody mentioned procurement. In fact, the business considered itself well run. Orders were being placed, invoices were being paid and production was moving. From the outside, everything looked perfectly normal.

Halfway through the discovery workshop I asked what I thought was a harmless question.

‘Can somebody show me the contract register?’

Finance looked towards Operations.

Operations looked towards Procurement.

Procurement looked back at Finance.

There was a brief silence that most boardrooms know all too well. Not an awkward silence. More the sort that says everyone is waiting for somebody else to answer.

Eventually someone smiled and admitted there wasn’t one.

Everyone relaxed…..At least they were all wrong together. That was the moment I knew this business hadn’t got a procurement problem. It had outgrown the way it bought things.

The funny thing is, that’s how almost every successful business starts.

When you’re small, nobody needs a procurement strategy. Dave orders the PPE because he’s always done it. Sarah negotiates with the packaging supplier because she gets on well with them. The Managing Director signs anything expensive while simultaneously wondering why every invoice seems to arrive five minutes before a board meeting.

It works because everyone knows everything.  Until they don’t.

Growth has a habit of exposing yesterday’s shortcuts.  More customers arrive. More sites open. New managers join. Acquisitions happen. Supplier numbers creep upwards. Before anyone notices, different departments are buying independently because it’s quicker than asking who should own it.

Nobody wakes up one morning and decides to run ad hoc procurement. They just wake up one day and realise nobody can explain where the money is actually going.

Over the next couple of hours we started pulling on the thread.

• One major contract had renewed automatically because the notice period had been missed.
• Two departments were buying the same product from different suppliers.
• Finance was discovering supplier commitments after purchase orders had already been raised.
• Several key suppliers hadn’t been benchmarked for years.  None of those issues would make tomorrow’s headlines.  Together they explained why margins felt under constant pressure.

  I’ve learned not to panic when I hear one of those stories.  I do start paying attention when I hear all of them before lunch.

  One of the first places I always look is the supplier base. Not because loyal suppliers are a problem, but because invisible suppliers are. Good suppliers expect to be challenged. They expect reviews, benchmarking and honest conversations. The suppliers that become nervous are usually the ones who’ve been left alone for far too long.

  Then comes contracts.

  Every business tells me they have a contract register.  I usually believe them.

  The more interesting question is whether everyone agrees where it is.  Somewhere in almost every growing business there’s a spreadsheet that’s become so important nobody wants to edit it. It’s survived three Finance Directors, two IT upgrades and at least one accidental deletion. At this point it probably deserves its own employee number.

  The systems rarely help as much as people hope.  I’ve yet to meet an ERP system that caused poor procurement.  I have met plenty being used as very expensive filing cabinets.
  Most organisations already own software capable of managing approvals, contracts and supplier performance. The technology isn’t the missing ingredient. Consistent ownership is.

  Eventually the conversation always returns to leadership.

  Who’s responsible for suppliers?

• Who’s challenging renewals?
• Who’s making commercial decisions before money is committed rather than after?

  Interestingly, the answer isn’t always ‘hire a Head of Procurement.’

  Sometimes that’s absolutely the right move.  Sometimes what the business really needs is experienced commercial leadership for a period of growth rather than another permanent salary.

  That’s why fractional procurement works so well for many SMEs. The business gets governance, challenge and commercial direction exactly when it needs it, without building an entire department before it’s ready.

  By the end of the afternoon the discussion wasn’t about procurement anymore.

  It was about control.
  Knowing what contracts exist.
  Knowing when suppliers should be challenged.
  Knowing where commitments are being made.
  Knowing that Finance, Operations and leadership are all looking at the same commercial picture.

  Before I left, the Managing Director laughed and said, ‘I thought procurement was about getting a better price.’

  It’s a common assumption.

  Getting a better price is often the outcome.

  Knowing where your money is going is what makes that outcome possible.

  Most businesses don’t realise they’ve outgrown ad hoc procurement because something dramatic happens.

  They realise because somebody asks an ordinary question…

  …and nobody in the room knows the answer.