John O' Gorman

The Changing Role of Procurement

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New Role for ProcurementThe Journey Towards Best Practice

We have talked about the golden age of procurement in many other articles.  In particular, the transformation of purchasing from:

  • An under-valued administrative function to a key business driver
  • A isolated department to an organisation-wide mindset
  • From a controlling bureaucratic mindset to a coaching role

Procurement Varies From Organisation To Organisation

The Role of Procurement Varies From Organisation To Organisation.  But to what extent has best practice become common practice?  Well, in conversations with international procurement managers show that text book buying is still not the norm.

Several buyers reported that they are still being brought in at the end, to do the negotiating on price (or what others might refer to as beating the supplier up over price) and to drive a better deal.

Yet, it is clear that even if the professional buyer is not physically present throughout the buying/sales cycle (and in particular the early stages) their influence is clearly being felt.  The ethos of better, or more careful buying has gone out organisation-wide.

Universally, organisations have ‘upped the ante’ in terms of the level of structure and sophistication of buying.  Just how this has manifest itself in terms of the role of the purchasing department and how it interacts with the large enterprise varies however.

Purchasing Gets A Seat At The Table

Some buyers are still being called in at the end, while others are being involved right the way through.   Some professional buyers see themselves as policing how their colleagues buy, while for others it more coaching role.   They even have different names for what they do, from procurement, to purchasing to supplier management.

Purchasing is on the road to change.  However, in many organisations the new role of purchasing is an emerging one.  Many purchasing managers talked of their experimentation with new methods and approaches and the learning achieved along the way.  In particular, some interesting initiatives were evident:

  • Faced with head count restrictions some of the managers have sought to push responsibility for purchasing back to the managers and departments doing the buying.  Thereby making their budgets go further and adopting a more strategic, or oversight role.
  • They are rewarding managers based on their commitment to learning and applying buying practices and procedures.  For example, linking purchasing autonomy and in particular thresholds for managers to the extent to which they have undertaken buyer led training programmes.
  • While most of the buyers are focused on educating their colleagues in buying, some of the buyers have even gone as far educating some of their suppliers in buying too!  One of the buyers proudly explained a quid pro quo arrangement where the sellers got buying training and the buyers in turn got training in selling!

The bottom line however is that there is no universal approach to buying (and perhaps there never will be), even in companies that are very similar in terms of size, industry, or background.  Hence it is essential for the seller to understand the role of purchasing on a case by case basis.

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