Buyer Analytics

Hugh Baker and Fabrice Saporito at Strategy + Business penned a provocative article titled "Saving Procurement from Itself". It makes the case that CPO's must change procurement from its traditional role of strategic sourcing by taking a seat at the strategy table.

What is procurement doing wrong? Procurement spends too much time refining the function.

They are increasingly focused inward, implementing sophisticated ways of improving procurement itself but neglecting coordination with the wider organization. Innovations of the past five years, such as e-procurement, e-auctions, spend analysis, and procurement outsourcing, reflect this attention. 

How should procurement focus their efforts? They should take a cross-functional approach to influence decisions and create value.

It’s time for those leaders to step up to the challenge: Procurement is uniquely positioned to reach out across the organization and the supply chain, pursuing cost reduction, but also emphasizing collaboration, innovation, flexibility, and resilience.

According to the article, there are several key ways for CPOs to accomplish these objectives.

• Develop a close working relationship with finance.
• Manage cross-functional trade-offs.
• Collaborate on the joint supplier–customer value chain.
• Gain preferential access to innovation.
• Design network resilience.

A potential reason procurement needs to be saved from itself may be related to organizational structure. In the quest to leverage spend a center-led organizational model is very common. However, this approach can lead to the function focusing inward on specialization. Needs at the local level may be overlooked or not even understood. Finding the right balance could be the ticket to meeting the overall needs of the business and achieving a high level of functional excellence.

Over at IACCM there is another take on this article titled Can Procurement Change? This is a good article, but these folks need to learn about blogs and RSS feeds.