Beyond the Cost Reduction Pill: What Corporate Malady can Procurement Executives Address Next?

I enjoyed the first installment of a guest blog over on Procurement Leaders authored by Sammy Rashed, who I had the opportunity to catch up with at Procurement Leaders' last US event in Chicago. Sammy, who serves as Novartis' global head of productivity strategy and PMO, is no stranger to the tactical elements of sourcing and procurement automation cost reduction. But, as he suggests, he's taking things in new directions at Novartis beyond typical Spend Management practices. No doubt, as Sammy observes, "procurement has increasingly become recognised as a strategic partner to the business...However while enjoying its time in the sun, the function has somewhat become a victim of its own success: driving savings through cost management and compliance has brought impressive results but at the same time kept procurement professionals focused on their knitting."

But there are certainly new areas to focus on. Among these, one of "the most attractive options...[is a plan to focus on the] demand management process by combining with other productivity enablers such as process reengineering (Six Sigma) and delivery models (offshoring and outsourcing) and offer much more comprehensive solutions than simply challenging user requirements and consumption." In addition, Sammy notes "It also became apparent that many leading global organisations had begun offering integrated end-to-end services solutions which in addition to streamlining non-customer facing processed and functions, also offer procurement bread-talent a potential career path to board-level position."

More effective demand management and end-to-end client (i.e., internal client, in most cases) solutions are no doubt logical areas for procurement to extend its focus to while continuing to pursue general cost reduction and compliance savings. But in addition to this list, I'll toss out two additional areas I've heard observed of late. One is for procurement and operations organizations to actually get involved in shaping solutions that an organization can bring to market on the commercial side (think back to the creation of one well-known 3PL that came out of an industrial giant). Another is to help drive the creation of programs that bridge functional barriers such as procurement and treasury by effecting new working capital and risk management strategies built on both supplier relationships and banking relationships.

Clearly, there's far more we could be doing as leaders in our field. I look forward to hearing more about Sammy's story and experience as he shares his thoughts in future posts on Procurement Leaders site. Stay tuned.

Jason Busch

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