04 September 2009 | Jake Kanter
Procurement must overcome its "identity crisis" to have a voice in businesses' biggest decisions, according to an industry analyst.
Speaking to SM, Michel Janssen, chief research officer at the Hackett Group, said CPOs across the globe are torn between securing cheap goods and services, and moving their organisations forward.
It follows a study by the US consultancy that found procurement is failing to cut costs at some of the world's largest companies during the recession (Web news, 26 August 2009).
Janssen said purchasing is in a "massive state of flux" and is uniquely positioned to deliver savings in response to reductions in revenue.
To make an impact, CPOs must use their supply chain knowledge and persuade senior management to redesign business processes and consider outsourcing, he said.
Kath Harmeston, group procurement and facilities management director at the UK's Royal Mail, admitted that the profession is "struggling" to balance its tactical, short-term duties with more strategic idea generation.
"We have the challenge of delivering value and savings to the business year in, year out, while also developing the next generation of ideas that will allow our businesses to survive, compete and succeed."
She added buyers must educate senior management about procurement and challenge their business priorities.
Andy Davies, director of the London Universities Purchasing Consortium, said an identity crisis was positive because it proves procurement is now battling with other functions for attention. "We have crawled out from under our stone and are saying that the relationship with the supply chain is critical to the business."
Colin Davis, head of supply chain at United Utilities, said buyers must "throw away traditional tools of measurement", such as savings targets, and act like entrepreneurs. "We should consider our departments as innovative businesses."
Adrian Cook, executive director of procurement at UK building materials firm Tarmac, disagreed that purchasing has an identity problem.
"CPOs need to be alive to their operating context. If the organisation is in survival mode then conversations on total cost of ownership, value and strategy are unlikely to be heard.
"Leadership will be interested in factors relating to price and cash."