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Vicious Cycle…and Opportunity

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The lack of remit, the lack of cross-functional engagement, and, ultimately, the lack of impact of Procurement, have in turn led to a vicious cycle of under-investment in the function. In many organizations, Procurement is therefore seen as a strictly back office function that's largely ignored by senior management.

But what this historical neglect brings with it is an enormous opportunity. Most of the external spend will be ripe for Strategic Sourcing: the spend will not have been leveraged or aggregated across countries or manufacturing plants. The specifications will be outdated, “what Engineering has always used;” and there will be longstanding supplier relationships that are never tendered, ready to be shaken up with a bit of competition. In short, significant savings potential will exist across the entire third party spend.

But of course, to capture that potential, you need to work backwards and fix the remit, fix the resources available to Procurement, and fix the investment level in Procurement. We need to find a better way. Well, the good news is, that better way has been around for over 30 years.

Profit from Procurement

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