Purchasers not making the grade on policy or service

11 May 2005
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12 May 2005 | Geraint John

Global procurement functions are doing well in terms of their visibility and cost-cutting efforts, but poorly on contract management, governance and customer service, according to a leading industry commentator.

Presenting his scorecard for 2000-05, Andy Kyte, vice-president and research fellow in procurement strategies at research company Gartner, said board members now understood the value of procurement.

That merited an A grade for visibility, he told 1,200 delegates at the Ariba Live 2005 conference in Orlando, Florida.

Procurement functions also did well on cost reduction, scoring a B plus.

The picture looked less rosy regarding spend analysis, while on workload planning he said purchasers tended to "stumble from one project to another", awarding a C and C minus respectively.

Things got worse when it came to contract management. Too many contracts were still stored in filing cabinets or boxes where users could not access them, he said, giving only a D.

But he was most scathing about governance and customer service. On governance, "the fundamental problem is that procurement wants to do all the buying and supplier management themselves", he said, giving a D minus.

Instead, they should concentrate on the way "decision rights" - who made decisions and who was responsible for them - were allocated.

On customer service, Kyte failed procurement functions completely for acting like process "policemen" rather than delivering services "that are so easy to use that [internal customers] want to do business with you".

Procurement was a "knowledge-dependent discipline", he said, and purchasers' value lay in their knowledge of supply markets and optimising sourcing decisions.

But many were still too "deal-focused" and poor at managing relationships.

"Wresting back control" from account managers, particularly in outsourced services, was essential, he added.

The task for global procurement functions this year, he suggested, was "to define, communicate and implement a governance model, and deliver excellent customer service to budget-spending lines of business".


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