Dive Brief:
- A new report from Harvard Business Review highlights the difficulty of quantifying the value of procurement and sourcing professionals, and how that difficulty affects their ability to streamline procurement operations for maximum efficiency.
- The report details ways for procurement professionals to maintain relevancy and pinpoints some of the major struggles procurement professionals face today.
- As supply chain managers seek to increase supply chain efficiency and mobility, they're often concerned with cutting costs and finding better ways to do more with less. Procurement professionals are needed within the supply chain, but may find it difficult to prove their worth as supply chains continue to evolve.
Dive Insight:
Let’s not fire Fred. Just transfer him to purchasing. That’s punishment enough.
Procurement has had an identity crisis since the days of the green eyeshades and quill pens, and sadly in 2017 we are still trying to identify how the profession adds value. Is it cost savings, cost avoidance, innovation, performance to standard cost, or the latest index of variables that prove some sort of value? Do other functional areas such as finance, engineering, human resources, or facilities management have to continuously prove their value?
No wonder the profession has a long-term inferiority complex.
Procurement is under attack from several fronts. Senior management is typically focused on cost reduction and most feel the role of procurement is to wrestle cost savings from suppliers. Internally, procurement is battling maverick spend by employees who feel that can do the job better than the pros and suppliers who sell through the back door, bypassing the department. Suppliers, themselves under margin pressure, are trying to balance cost and performance, adding pressure on existing relationships.
It is a constant battle for relevance and respect.
The procurement organization manages the external commercial relationships of their companies, ensuring a continuous flow of products and services that meet cost, quality, and delivery requirements. The performance of the supply base has a direct impact on customer satisfaction and ultimately the financial performance of their firms. Procurement is part of the organizational mosaic and their value as team members, relationship builders, and subject matter experts is inherent in the function.
The measure of success of a procurement organization is simple. A high performing supply base, as a result of strategic sourcing and effective management, needs to meet the goals and objectives of the business.
