How To Unlock Value Through Procurement

As the economy tightens and it becomes ever harder to win new business, companies are searching for ways to drive operational efficiency and improve their bottom line. One of the most overlooked ways to do this, argues procurement and transformation specialist Jono Wharfe, is to unlock better value in the supply chain.

“When businesses think about procurement and the supply chain, they often see a relationship primarily in terms of negotiations: can we get it cheaper, have you delivered the contract?” says Jono. But while price and contract management are important, they should be seen as the byproduct of doing the procurement basics well. Solely focusing on the procurement basics means organisations are missing a significant opportunity to increase efficiencies that in turn have a direct impact on the bottom line.

Jono has spent much of his career in large organisations transforming procurement from a transactional function to a more collaborative business partner – resulting in hundreds of millions of pounds in savings. So what can companies do to make that transition?

1. Get the basics right

“It sounds boring but get the basics right first, governance, data, delegated authority, RACIE’s, reporting cycles, communication, clear objectives aligned to business needs, performance reviews, the correct culture. If you get these in place savings will come and contracts will be managed effectively but more importantly you start to build the trust across the organisation that allows procurement to support real performance improvements.”

Doing the procurement basics well will deliver savings and mitigate supply chain risk, but procurement should and can aspire to deliver so much more to an organisation.

By understanding the root cause, organisations can implement practical solutions to prevent similar problems from recurring in the future.

2. Use data-based evidence to drive change internally

Jono observes that it is all too common for suppliers or procurement teams to be blamed when costs rise or delays occur. Phrases such as “the process has taken too long”, “the wrong product was delivered”, or “they weren’t on time” are frequently heard. While there are occasions where these criticisms are justified, establishing robust procurement fundamentals changes the narrative.

When procurement basics are firmly in place, not only are these issues less likely to arise, but there is also clear, data-driven evidence to support the assessment of where responsibility lies. This enables organisations to factually determine whether or not the supply chain was the source of delays or cost increases. If evidence shows the supplier was not at fault, it prompts a deeper internal investigation into the true causes of the problem.

More importantly, having this visibility allows businesses to address the real issues effectively. By understanding the root cause, organisations can implement practical solutions to prevent similar problems from recurring in the future.

While it is true that robust procurement practices can and should contribute to reducing or maintaining the overall cost base, and that procurement plays a key role in minimising supply chain risk, a truly outstanding procurement function goes beyond these basics. The greatest value comes when procurement works collaboratively and constructively across departments—partnering with finance, operations, marketing, and legal to drive improvement throughout the organisation.

When procurement teams engage proactively with other business functions, they move from being a transactional support to becoming a strategic partner. This integrated approach enables organisations to leverage collective expertise, align objectives, and achieve superior results that benefit the entire business.

In one particular organisation, Jono encountered a situation where both the supplier and the business unit were contractually accountable for failures, with each party exposed to considerable financial penalties. At first glance, the arrangement appeared effective; the reported liability payments at year-end were notably low, suggesting successful contract management. However, beneath the surface, significant performance issues persisted.

What was actually occurring was a practice of netting off substantial liabilities incurred by both parties, orchestrated by senior operational managers. This process masked underlying problems and created a misleading impression of healthy performance. By implementing core procurement fundamentals and prioritising rigorous data monitoring, Jono was able to bring longstanding issues to light. The intervention not only improved the transparency of performance data but also led to better service delivery and resulted in multi-million pound liability payments to the organisation for poor supplier performance.

Crucially, by adopting a factual, no-fault approach to contract management, true visibility of operational performance was achieved. This transparency compelled all stakeholders to address weaknesses and drove sustained improvement in service delivery for future contracts.

3. Think of procurement, the supply chain, and operations as part of the same ecosystem

Procurement and supply chain teams occupy a unique vantage point within organisations, granting them visibility over all functions—from recruitment and HR, through operational delivery, and extending to marketing, finance, and legal. This broad perspective enables procurement to identify issues spanning the entire business, without claiming expertise within each specific discipline. Procurement’s strength should shift to helping the organisation detect end-to-end challenges, employing data to clarify problems factually, and sharing market innovations.

Jono emphasises the central role of “fact based communication” in unlocking procurement’s full value. Honest, open conversations are essential for challenging the business to consider alternative approaches and striving for better outcomes. These discussions should explore how procurement can support other teams, whether by identifying beneficial new technologies or securing critical products.

Transparent relationships with suppliers are equally important. Understanding where suppliers face difficulties or incur costs allows businesses to avoid behaviour that pushes costs onto suppliers—costs that are inevitably passed back. The aim is to foster ongoing relationships that are collaborative rather than adversarial or purely transactional.

Jono provides a compelling real-world example. In this instance, a supplier had incurred substantial costs as a result of delays that were entirely outside its control. The existing contract, however, did not acknowledge these additional expenses. Initially, the procurement team chose to enforce the contract strictly, holding the supplier accountable without considering the broader business implications. They failed to recognise that, should the supplier choose to withdraw, the project would be set back by a further two years.

Recognising this, Jono made the decision to engage directly with the supplier. By moving away from a rigid, contract-focused mindset and instead opening a dialogue based on partnership, he was able to reach a constructive resolution. This proactive engagement not only averted a significant two-year project delay but also resulted in savings amounting to tens of millions of pounds for the organisation.

4. Change the culture

For years, the culture within procurement has centred on negotiations, savings and the adoption of technology solutions, to offer step changes. However, these longstanding priorities may be limiting procurement’s ability to deliver genuine value add and unlock its full value creation potential.

Jono suggests the real opportunity lies in creating a culture of collaboration with both the business and suppliers to identify and drive performance improvement while delivering the procurement basics.

The emphasis must move away from a sole focus on negotiations and savings towards a culture of continual improvement and partnership.

5. Conclusion

In conclusion, unlocking the full value of procurement requires a fundamental shift from transactional interactions and cost-centric negotiations towards a culture of collaboration, transparency and continuous improvement. By embracing open communication, fostering genuine partnerships with suppliers, and doing the procurement basics well, organisations can drive operational efficiency and improve their bottom line.