Whilst procurement can deliver savings and improve supply chain relationships in isolation, it’s at its most powerful when it’s integrated into wider business operations. Making this a reality usually requires senior management support. But does senior management understand procurement?
A recent survey of over 500 CPOs, managers and procurement professionals, by procurement consultancy 4C Consulting, looked at how procurement is viewed by senior management. It found that half of the procurement professionals surveyed thought that their bosses don’t “get what the procurement team does or can do.”
Is procurement seen as strategically relevant?
This highlights the need for procurement – and the CPO in particular – to communicate what value their team can add. If not, procurement will continue to be treated as a support function that isn’t seen as strategically relevant.
More than just cost-cutting
Procurement is likely to be seen as having value but solely as a cost-cutting tool. Often it will be used to push down price in final negotiations. However, survey after survey has shown that earlier procurement involvement delivers real value – not just in terms of cost but for the lifetime of the contract.
In a world where speed-to-market and dynamic supply chains are increasingly essential, the role of procurement in terms of supply chain management shouldn’t be overlooked. When the world’s most valuable company is led by its former CPO, companies really should be alert to the strategic potential and importance of procurement.