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Is Procurement a function or a process?

January 9, 2017

Are Supply Chain, Procurement, and IT on different Planets from Category Management and Operations?

That’s a question posed by Daryl Fullerton in a recent article. Daryl concludes that the answer is ‘yes’ and that this results in the failure of many performance management and relationship management (SRM) initiatives. He offers some great examples and explores where improvements need to be made.

But it seems to me that the real issue is that each of these entities – Procurement, Supply Chain, Category Managers, SRM managers etc. – sees itself as competing with the others. Rather than recognizing they collectively contribute to an integrated process, they instead fight over relative power and status. I had an example of this just last week when speaking with an executive from a major retailer. He explained how there was an on-going battle between Procurement and SRM over who should undertake supplier selection on major projects. His story was typical of the tensions I encounter in so many organizations, where confrontations are about power, not business interests.

I remember the days when I came at business problems from the perspective of organizational design. It seemed that if only you could wrestle power away from those idiots in sales, or project management or wherever, then everything would be great. It took a very wise and seasoned senior executive to help me understand that organization is actually the last thing you should look at, because it is always an area of contention and political in-fighting. He taught me to think in terms of the overall process, since it is much harder for people to argue against improvements to process.

Many of the ‘specialisms’ we see emerging  are really more about the urge for individuals to gain influence and security than about a business need. Hence it is not surprising when many fail to improve business performance – indeed, as Daryl observes, they may even damage performance. The complexity of procurement today – and its potential to add value – is being jeopardized by a failure to think in terms of the overall process. As my mentor observed, ‘Never let good business judgment get in the way of internal politics’.

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