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Supplier Management, Sourcing, Procurement …. which matters most?

June 5, 2013

It has been interesting to observe the steady proliferation of functional names and job roles within the overall area of purchasing. Does this reflect a growth of value and an expansion of role within the business? Or is it because of confusion and attempts to display value? And of the titles now on offer, is there a meaningful distinction between them and the contribution they make, or are they interchangeable?

In many cases, it seems that ‘specialist’ groups emerge because they want to distance themselves from the mass of their colleagues. ‘Purchasing’ was deemed too administrative, so there was a trend to change the name to ‘Procurement’ which was somehow deemed more managerial. Then came ‘supply management’, which might be a job in its own right, or could be an umbrella term covering all areas of purchasing activity, including Logistics. In addition, there were splinter groups such as IT Procurement, or specialists in Outsourcing, or the more recent Supplier Relationship Management.

Today, the more ambitious and creative members of Procurement teams often want to distinguish themselves from the process-driven world of compliance, commodities and category management (though there are Category Managers (yes, another title) who would argue that they are in fact the ‘commercial core’ of the function).

It is hard to know what we should make of all this, except it confirms the trend in many areas of business to become ‘a specialist’. Somehow, we appear to believe that there is greater safety in being distinct from ‘the masses’ and boasting specific knowledge or expertise. The problem for Procurement is that it is not really deemed a true profession. Lawyers, doctors, engineers and accountants have an over-arching title that is recognized and respected. Being ‘a Procurer’ does not have quite the same ring – nor would most people feel flattered to be called  one!

In the end, I do think these shifts in title are reflective of efforts to raise value. The journey is unending, but right now it is clear there is widespread concern that procurement practices are too mechanistic, too driven by process adherence and too little driven by commercial judgement. Even CIPS has acknowledged this fact (the need for greater commercial acumen). So will ‘Supplier Management’ provide a wider array of skills and new sources of value? It does seem to me that there are genuine trends towards a more outward-looking, analytical function that takes greater responsibility for the outcomes of its work and which seeks to build understanding and empathy with suppliers. This is in part evidenced by the numbers now joining groups such as Procurement Leaders and IACCM, where they gain new and more expansive knowledge.

Process is important, indeed it is integral to good and efficient operations. But it is the baseline, not the end point. To flourish, Procurement must become far more than a process owner. It must use that process to support an ability to solve problems, undertake analysis, communicate effectively with stakeholders, facilitate supplier dialog and develop strong relationship skills. If that is achieved, functional names and job titles will become far less important.

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