6 May 2010 | Andy Allen
Procurement is increasingly a means to boost an organisation’s growth and competitiveness rather than simply cutting costs, says consultancy Efficio.
According to a study many companies are refocusing on top-line growth as they emerge from recession and are asking procurement to develop strategies to align themselves with this, rather than concentrate on cost-cutting.
The study, entitled The Strategic Secret Weapon, how procurement can benefit your organisation, says sourcing based on value involves a shift in focus. Instead of being measured in terms of the potential savings that can be generated by cutting costs, a supplier’s contribution is measured according to the long-term value they can create for an organisation.
The report’s author, Efficio vice-president Luisella Chiesa, said that while it could be difficult to orientate a procurement department’s function away from cost-cutting and towards value-based sourcing, the rewards of doing so can be substantial.
“Collaborative cost reduction can be used to set up the processes and mindset that foster and reward suppliers’ ability to innovate,” she said.