Tim Cummins fired off an an interesting post in response to a Procurement Leaders commentary that "the current economic environment has caused Procurement efforts to be diverted from delivery of value to delivery of lowest price". Tim takes issue with this argument for two reasons. First, he does not see evidence "that most Procurement groups ever bought in to value versus price" and second, he asks for the "evidence that those who understood this difference have in fact changed their behavior". To make his case that procurement is not just beating down suppliers on unit price at the moment, Tim suggests that IACCM has received "numerous calls from members" in recent months "asking for insights and data that would assist in showing executive management why an aggressive approach to suppliers would be wrong".
Where do I stand on the issue? Personally, I think Tim is only seeing part of the market -- the more sophisticated organizations. IACCM's active membership -- not just members, but truly active participants -- from a procurement perspective is forward thinking and probably represents only a low double digit number. Procurement Leaders is right to point out that procurement is becoming spineless inside lots of companies (as is finance, which is often mandating new onerous payment terms). But Tim is also right that enlightened companies are taking a different perspective focused as much on managing the relationship for total cost as managing specific unit costs. In this case, I think both perspectives are accurate, even though I would hope that more organizations follow the lead of IACCM's more sophisticated active membership base. After all, if you don't have a backbone, you could be building an unstable supplier house of cards.