A Brief History of Procurement: From Accounting Roots to Today

I have to hand it to my colleague Peter Smith, who runs Spend Matters UK/Europe. More often than not, I find myself checking in on his work to discover that he’s managed not just to distill something complex around procurement (e.g., advanced sourcing or contract management technology) into something in layman’s terms, but that he also comes up with ideas that are disarmingly simple yet extremely important to consider. I sometimes ask myself, “why didn’t I think of it that way?” only to realize that I never would have come up with anything close to the kernel of the idea in the first place.

One of these gems of an idea that Peter surfaces is in the paper, Putting the Supplier at the Heart of Procurement Thinking, a title that is simplicity self-explanatory yet fractal, becoming more complicated the more you dig. I encourage you to read the entire essay to discover, how, in Peter’s words, “supplier management is moving towards the centre of procurement thinking.” Peter begins his argument by giving a history of procurement beginning in the 1920s, noting that “from the 1920s, the codification of bureaucracy as a method of running organisations, and the whole idea of administration, recording and accounting for the goods and services (still principally goods at this point) used by the organisation grew in profile and importance.” Hence the profession did as well.

We then progress to the latter half of the last century, when “the legal contract also became more important as a focus for procurement, as the historical handshake gave way to more formal means of recording the agreement.” Peter even gives credit to the rising role of ERP systems in the 1980s and the “exponential” growth of procurements as lending a “much stronger focus on procurement process.” The narrative then picks up around 20 years ago, with the introduction of scientific rigor around procurement process and analysis, a period marked by the rise of category management, which led “to the growth of the professional procurement cadre, the expansion of Institutes like CIPS and ISM, and a whole range of new professional services and solutions.”

But in Peter’s words, “nothing stands still for long.” Indeed a new era is upon us. Download Putting the Supplier at the Heart of Procurement Thinking from our free research library today to read for yourself. In the coming weeks, we’ll continue to feature some additional highlights from Peter’s analysis.

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