Читать книгу Profit from Procurement - Jose Oliveira Valentede - Страница 9

The point regarding remit is fundamental: it asks the question, what is expected of Procurement? Unfortunately, many Procurement functions do not have a remit to “work with the budget holders to proactively optimize their cost base using the full suite of supply and demand levers.” Rather, the expectation is that Procurement will come in at the last minute to negotiate and execute the contract. That remit will allow Procurement to achieve maybe 25% of its potential. And therein lies the problem, or the opportunity…the Procurement function is probably doing a good job—but based on an overly narrow remit.

The root of this problem is that Procurement's history lies in administration. The function started life as a mechanism to legally procure goods and services on behalf of the business and is therefore seen as a support function—one that ensures that supplier contracts get signed and materials show up. Over time, Procurement teams have been built on these administrative foundations as their functions have evolved. In many organizations, the budget holder actually makes most of the decisions—from deciding what part is needed, to deciding to go with the OEM (Original Equipment Manufacturer) part to, very often, talking to the OEM and agreeing to a price. Only then is Procurement brought in, to close the deal, sign the contract, and order the part. And that's the typical remit…which ensures that probably 80% of the cost is already locked in by the time Procurement comes to the table, thereby severely constraining Procurement's potential contribution from the get-go.

Given this restrictive remit, it comes as no surprise then, that Procurement often hasn't developed anywhere near the right cross-functional operating model: see Chapter 5: Operating Model, for a more detailed discussion of this. To make matters worse, in the absence of a clear role, buyers can sometimes adopt unhelpful mindsets. Instead of adopting a service mentality along the lines of “I am here to help you with your spend,” there is often a mindset based on perceived authority.