Guest article by Simon Appleyard and Gerry Bolton, independent consultants in the Finance, Procurement and Shared Services sectors.
It is not actually that difficult to imagine the digital future of Procurement, and in this 3-part series we take you through the stages of how to get the most out of your Procurement function. In this part, we focus on Procurement as the focal point for strategic supplier management.
As organisations increase expectations around what they want from strategic procurement, they are challenging not only the role that the function plays today but also the role that will be expected of them tomorrow. In most of the organisations that we work with, Procurement operates as a subsidiary function to Finance (the notable exceptions tend to be organisations where direct Procurement is core to business activity, e.g. Retailers) and is often treated as a ‘second-class citizen’. Heads of Procurement seldom have a seat at the top table and the Finance Director seldom has a procurement background. As a result, the strategic direction of the Procurement function is often limited.
Addressing this situation involves asking questions about the value a Procurement function should really be bringing to the table in the digital world. The answer, we would propose, is that of a function that truly recognises and drives opportunities for change within the organisation and then supports enablement of third parties to add value to the organisation. In a digital world that is ever more inter-connected and where the pace of change is ever accelerating, there is a need to track and understand the additional value an organisation’s partners and suppliers can offer.
In some organisations, Partner Manager roles are created precisely to try and identify and work with those suppliers that are considered strategic and can bring additional value into the business. Where these exist, they often sit outside the Procurement function and, in fact, their presence decreases the strategic nature of Procurement as key partner interaction is removed, leaving the Procurement team merely operating as an administrative support function to those larger partnership roles.
