Re-define your relationship with users – 2014 priorities for procurement leaders (part 2)

What should CPOs and other senior procurement practitioners be focusing on in 2014? A difficult question because of course every organisation is different, and you really need to ensure that your priorities align with your wider functional, business unit and organisational strategies, goals and objectives. But we’ve got five suggestions that are likely to apply in the vast majority of organisations, we suspect.  Here is the second.

2.                   Re-define the relationship between procurement and ‘users’

By ‘users’ we mean internal stakeholders – principally the budget holders, specifiers and users of the goods and services that procurement buys, or has an involvement in buying. This has been a major topic for procurement for many years really, but we see trends pulling in different directions and making this a very challenging issue for many procurement functions and practitioners.

On the one hand, a greater desire to control expenditure and manage supply chain risk, which organisations are more aware of than ever, is leading in some cases to a stronger governance or gatekeeping role for procurement. This fits with the CIPS ‘licence to practise’ idea that only qualified procurement people should be ‘allowed’ to buy.  But in some cases, this is implemented through procurement taking what is really an after-the-event role, authorising a purchase or a contract after the real value-adding work has been done. Not so good, we’d argue.

Counter to this, we see procurement trying to get closer to the budget holders and working in a more integrated fashion, recognising that ‘users’ will always play key roles in the overall procurement cycle (including specification, early market engagement, and contract management as well as the core sourcing element).

Personally, the second seems a more fruitful and positive approach, but taking an even wider perspective, technology is starting to pose some even more fundamental questions – such as ‘do we need procurement at all for most of the work currently done by the function’?

 As systems get more user friendly and easier to access, without huge set up costs or user training, budget holders can more easily than ever interrogate spend analysis platforms, run simple (or even not so simple) eSourcing exercises, and so on. If procurement has been seen as largely a process delivery function, users may start questioning the value of that. There’s also the question of what procurement services might be better bought-in, as the range of available outsourcing and related options increases dramatically.

I don’t think for a moment that procurement functions are going to disappear overnight. But more organisations will be looking hard at what needs to be done and who is best placed to do it, in terms of managing the end to end engagement with the supply base.  So here are our three ‘take-aways’ for practitioners to consider:

·         Think hard about which activities really should be the ‘core‘ of the procurement role and the function’s central responsibility.

·         Consider what can be done better by other stakeholders,  how procurement should engage with them and what role procurement can play to support those delegated activities.

·         Look at what might be better outsourced – it doesn’t have to be everything (in fact it rarely is these days) but there are interesting options to consider.

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