Readers’ comments – CIPS 80:20 Vision “future of procurement” report

Here’s another in our series featuring recent readers’ comments – let’s go back to our two-parter that looked at the CIPS 80:20 Vision document. It considers the future direction of procurement, and we thought in general it raised some very good points.

We had some agreement that the importance of risk management is going to increase, but we were particularly pleased to get a really excellent comment from "DJF" – their first comment ever on the site, we think, and it was a very fine one! Here’s a (substantial) extract from it:

I think Procurement is rapidly evolving. I don’t think any ‘one’ Procurement function is ever the same…. Procurement “constantly reinventing their roles as business needs shift” is an important point, worthy even of its own article!

I have been in procurement for about 8 years. I have worked in 4 different organisations. Currently Private sector. I can reflect from my own career Procurement’s development…At the start of my career – Procurement seemed transactional, administrative, back office and not very involved.

Second Role – Procurement seemed more consultancy based, what are the volumes, let’s benchmark, lets agree a pricing framework/shopping list! Is pricing competitive?

Third role – How can Procurement assist Finance in delivering bigger value through our current supply chain – analysing Finance data, identifying ‘opportunities’, what is the most appropriate sourcing strategy? Persuade stakeholders it’s the right way to go, lower the cost!

Fourth role – In my view the future of Procurement (medium-term (?)) Develop a function. Implement flexible adaptable buying tools to assist and educate stakeholders in best buying practice, Procurement to be the gateway, but stakeholders own the requirement. Procurement will assist in how this affects other deals, how does this renegotiation or new requirement link into another? How does it link into the overall business objectives, goals, strategy? How can we improve bottom-line, profit, also a big emphasis on what model will deliver the most significant business value (i.e. most attractive to shareholders – potential buyers!), also how can Procurement structure the most commercial terms for Cash Flow improvement across the business. In addition, focus on efficiencies.

Ultimately – and to keep it simple…On assumption following is already decided:

  • Specification
  • Supplier Selection
  • Service Levels

Procurement’s role, the way I see it, is then

1. Review Service Levels – tightening / renegotiation necessary?
2. Contract Content – any issues?
3. Negotiate robust Commercial Terms & Pricing!

The biggest challenge I find for Procurement is the board/shareholders expectation; Procurement will deliver this year “x amount of £m savings!!” “Off you go Procurement.. do your thing!”….

However, as I describe above Procurement is no longer just a focus on unit cost negotiations…. New requirements that require due diligence and Procurement engagement need time and attention to detail, these initiatives cannot be reported in terms of “was £1, now 50p”.

How targets and savings are communicated – again, probably another article in its own right. I wonder what others thoughts are on the ‘changing/evolving’ role of Procurement? And are the days of ‘SAVE £X!’ (primarily unit cost reduction) behind us?

Thanks, DJF,  I happen to agree with pretty much all of this, and we’ll be returning to the “savings “ issue again soon!

See our new Spend Matters search4 procurement website with great procurement job opportunities here!

 

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