Last week I spoke with a purchasing manager about the opportunity for savings in the category of benefits and insurance. The manager was in complete agreement that his company could probably save millions and that insurance categories had never been properly sourced within his organization. He then shyly announced his plans to kick off a sourcing initiative in the category - in about two years.

Given his company’s urgent need for cost savings, I asked why not get started now? The answer was simple. The person in charge of HR who currently owns the spend is reluctant to let purchasing look at the category, but that person is set to retire in about two years.

Sadly, this approach to change management is all too common in purchasing organizations. Rather than building a business case and developing the subject matter expertise that’s needed to challenge traditional thinking and move projects forward, purchasing all too frequently accepts the boundaries they are given and quietly awaits the next opportunity.

Given the global recession, the explosion of excess capacity, and the instability of most markets, forward thinking organizations are expanding the scope of purchasing. But that change frequently comes from the top down, with Finance or another executive office providing purchasing access into previously untouched departments and categories.

A good purchasing organization should be thinking about all the low hanging fruit available in those traditionally “hands-off” departments, and using the current economic climate as a lever to get access into those areas of spend. There has never been a better time to expand the role of purchasing, and doing so could have a huge impact on the bottom line of your company.
Share To:

Joe Payne

Post A Comment:

0 comments so far,add yours