Research & Insights
The Shared Services Model is Bad: Procurement Myth No. 5

We continue our series on the top 25 procurement myths. Some you may know, others maybe not. You also may agree with us on certain ones and not others. But, the important thing is that we have this discussion. We will post 1 a day here on Chief Procurement Officer, so make sure to check back on the site to catch them all.

5. Shared services is a bad model for procurement

Shared services is an operating model that can seem wrong for procurement. It often starts in finance, namely in accounts payable, and creeps its way upstream to transactional purchasing and then threatens to subsume strategic procurement activities into a transactional, SLA-driven, efficiency machine. It doesn’t have to be this way, but it certainly can go down this path if procurement is not actively involved in shaping how a “Procurement Business Services” model can work. While a CFO likes centralizing resources into a service center to reduce headcount, procurement can get a lot of value out of moving transactional activities as such because it forces a level of process definition, process standardization (and data standardization – especially when you include master data management in the scope – such as supplier master data management), KPI alignment between sourcing and P2P (and accountability) and justification for needed automation. A shared services model, if done well, can also help enable the “tactical sourcing” process, or the “tail spend management” process that is both sourcing and buying

For more on procurement business services, please see here.

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