Procurement's new place in business: Everywhere

When strategic sourcing takes hold, silos among clearly defined departmental roles come down. While it isn't always easy for companies to welcome new voices and insights into processes that have traditionally been isolated, it's clear why this period of growing pains is necessary to realize savings down the line.

With the improvement of data collection and analytics tools over the past few years, procurement and sourcing professionals have a window into important metrics. The rest of the company may benefit extensively from receiving insights discovered in the supply chain, both before contracts are signed and on an ongoing basis.

With this concept taking hold, it may soon be common to hear procurement input in departments that have never had it before.

Measuring procurement's real impact
Spend Matters recently highlighted some of the processes that will have to take place for procurement to become a true team effort. The sourcing departments of the near future will become embedded in other departments' plans, helping to create valuable strategies. This kind of involvement will help establish the kind of assistance procurement officials can provide beyond simply signing contracts for less money, the traditional duty assigned to these employees.

This new way of showing off the value of procurement will be necessary as that worth increases. Spend Matters pointed out that in the years ahead, procurement departments will be brought in for spend optimization outside of the basic supply contracts that have been their main responsibility. This calls for a lens that truly measures the impact of collaboration, rather than old-fashioned metrics used to determine what is working.

Adopting a serious new focus
As with all corporate departments, procurement is defined by the people who serve in the role. A recent Purchasing B2B discussion focused on the ways that new, strategic types of supply chain operations are affecting talent strategies. One of the participants, Hays' Sean Naidu, stated that facing a new world in which procurement is a strategic function rather than a cost facilitator has caused employers to become more dedicated in the way they staff their teams. They want individuals who can easily address the new priorities facing the sector.

Adding to the talk of embedding procurement within other departments, Canadian HR Solutions CEO Caroline Cole Power explained that procurement and general finance are now closely joined in their operations and objectives. Rather than two departments - one which handles the strategic budget and the other managing the contracts - the two teams will work together at all stages. This strategy makes sense, as they safeguard the same bottom line.

Leaving the pre-strategic era behind
Taking on strategic sourcing and procurement as a main mode means that the older, silo-based approach will have to be shelved. Companies that turn to their supply chain professionals for only transactional help, not tapping their strategic knowledge or potential analytics findings, may end up behind those that maximize the potential of the department.

While implementing changes in personnel expectations and relationships between departments may be a strain at first, the financial benefits are becoming clearer and harder to resist.
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