Why Procurement shouldn't be called Procurement

It’s interesting to look at different careers and decipher between the sexy ones versus the perceived old, boring ones. I mean, who dreams of becoming a procurement category manager? I didn’t, but I have been, and I know a few… Procurement struggles with it’s reputation, constantly having to prove their worth to different stakeholders often making up highly irrational and exaggerated savings numbers to demonstrate the value add. This corporate version of small man syndrome creeps in to the organisational behaviour and limits the boundaries of what is possible.

 But what is Procurement and what is it trying to achieve? At it’s simplest, you don’t buy something just for the sake of it, it has to be bought for a reason. For old school Procurement organisations that reason is usually because they’ve been asked to by the stakeholder (normally as a tick box exercise), or an analysis shows some type of saving can be made by consolidating suppliers and going to RFP. Whilst this does add some value it’s backward looking, and that tunnel vision of cost savings forgets the reason the product or service is being bought in the first place, which is solely to enable the business to grow.

 It’s interesting when comparing this to the fashion industry. At University young creative men and women are often desperate to break in to this industry, wanting to become captains of the fashion industry, with the most sought after role being … the buyer! So what’s the difference between a buyer at a fashion house and a Procurement manager at an IT firm? I did a quick google search for open buyer job opportunities and clicked on the first one, a fashion retailer in NYC. The first line of the job description read ‘The Buyer, will be responsible for identifying product opportunities and executing merchandising strategies to maximize sales, margin and store performance’. Interesting, exciting and summarises the perception of a buyer in that industry perfectly. ‘identifying product opportunities and executing merchandising strategies to maximize sales’. Revenue mentioned first, margin second. And notice it’s margin not cost, or reducing cost. This is deliberate and implies value and growth as the main focus not cost.

For fun and to be completely fair I then googled IT procurement job opportunities and clicked the first option. The first result was a large production company so I clicked and read the first sentence ‘The successful hire will be responsible for managing a large number of IT Suppliers and their contracts, being the lead sourcing person on RFX projects’. The lead sourcing person on RFX, managing a large number of IT suppliers. Not one hint of growth, value or innovation through suppliers. I’m sure it would be mentioned somewhere in the 15 bullets that preceded the job description, but it’s not number 1. But it should be.

Whilst there’s still the need for Procurement cost savings and that won’t disappear any time soon and shouldn’t, Procurement should primarily focus on delivering growth to the business through speed of delivery and recognised value to execute business strategy. Gone are the days where Procurement solely focus on cost, threatening stakeholders to report them if the process is not adhered to. Procurement needs to be agile, flexible, creative and focused on finding products and services that drive real value. So maybe Procurement needs a face lift and a new name.

ANNOUNCEMENT: OES Partnership with SAP

NEXCO BUSINESS SOLUTIONS are pleased to announce a new partnership with SAP, with a focus to re-sell SAP Business One solutions to customers. Nexco Buiness Solutions have a wealth of experience in business and transformation strategy. The new partnership will allow Nexco to leverage SAP B1 capabilities to produce even more robust, data driven insights for customers. Our wealth of strategy experience combined with the insights from B1 differentiates us from other consultancies as well as SAP Partners, who typically focus on implementation of the software rather than the insight the software can bring as an input in to customer strategy.

We look forward to building this relationship over the years in order to deliver even more value to our SME customers.