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The Role of Procurement

May 9, 2011

Last week, I wrote about a panel discussion that I moderated at the Corporate United ‘Synergy’ event, consisting of three executives (a CIO, head of Sales and Marketing, and a Deputy General Counsel). Our topic was ‘Perspectives on Procurement’.

As a final question, I asked the panel to imagine that they had just been appointed CPO at their respective companies and to tell me whether they felt that Procurement has a positive future, and what they would do to ensure that future.

Each of them confirmed that they see Procurement having an important on-going role – but of course there is a need to adjust to the many changes affecting business today. Among their thoughts were:

  • Technology enables selective involvement. Procurement must put technology into the business groups that enables them to drive the acquisition process, while Procurement can monitor activity and determine when and if to become involved in a particular project or transaction.
  • Collaboration is key to Procurement success and this demands much greater attention to understanding requirements and offering value-add knowledge and ideas – and much less focus on understanding and imposing ‘the rules’.
  • Commoditization continues to spread and Procurement will of course provide the tools and methods to ensure the business takes advantage of this. But they must switch their focus to the things that remain more complex – for example, take the opportunity to become more effective in international operations and market knowledge.
  • Procurement tools and systems have brought great value by offering end-to-end process visibility, enabling greater speed and reducing non-compliance in areas such as contracting. The drive to continue improving performance through the right tools must be maintained.

Interestingly, although all the executives want Procurement as a strategic partner and to increase its understanding of their role and business, there was little support for Procurement taking on more of a relationship management role. Indeed, one panelist expressed the view that a key value of Procurement is their ability to be the ‘bad cop’ and allow the business or other functions to protect the supplier relationship.

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