Proxima webinar – shifting corporate management’s attitudes towards procurement

The Proxima report from last year on Corporate Virtualization is going to be an essential part of the procurement library for many years to come. Actually, I suspect it will be one of those documents that is much more referred to than actually read in detail, because many, many consultants, senior procurement people and others are going to be referring to its findings for years to come. You know the core of it by now – organisations spend on average almost 70% of their revenues with third part suppliers, as opposed to just 13% on staff costs.

If you’re interested in what this means for procurement, the implications of the findings, and why this hasn’t yet resulted in procurement being celebrated across the land, then you can now listen to an hour’s learned discussion about the topic, titled “Shifting corporate management's attitudes towards procurement”.

OK, maybe not ‘learned’ exactly, but it was lively and enlightening, I believe. I’m biased of course because I was a panellist, along with Guy Strafford and Scott Sparks of Proxima, all hosted and chaired by Jon Hansen, blogger, radio host and commentator.

One point that I found notable in the report and still resonates concerns how well the average CFO even understands the situation – (or doesn’t). A number of CFOs were interviewed as part of the study, and without exception, they did not know how much of their spend was going to suppliers, and in general they hugely underestimated their organisation’s actual position.

Now that begs some obvious questions. Does the CPO, the procurement lead, know those figures? If they do, they really need to make sure the CFO and indeed other Board members do too. And if the CPO doesn’t have those numbers, then perhaps they should make it a priority to get hold of them. Then of course we have to tell people what we do – I don’t much like the term “marketing” when used to describe communicating the benefits of procurement, but that is in effect what it is.

Here’s an approximate quote from me during the session.

“I had a views as a young manager and even as a director, that if we did a great job in procurement, our contribution would be recognised without having to do a lot of promotion. People would just appreciate our genius”.

But of course they don’t.We have to proactively tell them.

We also talked at some length about the role of procurement, and moving away from the cost reduction focus onto something more nuanced and better related to shareholder value. I suggested that maybe procurement is too closely aligned with the Finance function in many organisations – so their priorities (process, cost reduction, control, compliance) become top of the procurement agenda too.

And it still strikes me that the fundamental problem of measurement remains. As a profession, we really need to get our heads around a better way of measuring our performance, one that encourages procurement professionals and colleagues to see what effective procurement can deliver beyond the blunt instrument of cost reduction.

Anyway, here is the link to listen back to the webinar, free on registration. And if you haven’t got a copy of the original report yet, you really should, and that can be downloaded here on the same basis.

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