‘Don’t always go for the cheapest price’, buyers warned

Will Green is news editor of Supply Management
2 February 2014

2 February 2014 | Will Green

The head buyer at Standard Life has warned against aiming for the lowest price.

Margaret Gibson, head of group procurement and premises at the financial services firm, told a conference she did not think the role was “all about savings”.

“If you aim for a lower price it’s unlikely your suppliers are going to give you innovation,” she said.

And she cautioned if competitors were paying more “there is a chance they are getting innovation and getting better solutions than you are”.

“We don’t always go for the cheapest option,” she said. “Is it all about savings? I don’t it is. I don’t think my function will survive if all we look at is cost savings.”

Gibson told the Procurement Transformation Summit in London that Standard Life - which has an annual procurement spend of £300 million - launched a change programme for the buying department in 2007/8, which involved reducing complexity and standardising and consolidating activities.

But she said the role of the buyer had changed, with technology now enabling internal customers to do much of what was traditionally seen as procurement activity.

“In 2008/9 we were working harder at cost savings, driving down supplier numbers. We have moved on significantly from that,” she said.

“There are only so many times you can go back to the market to reduce costs before you have to do some re-engineering.”

Gibson said the role of procurement should be to provide information and be a “trusted advisor”, rather than just being “the money police”.

“We do have a unique position in the organisation with access to so much information that we can shape thinking,” she said.

“The challenge for us is how do we transform ourselves into a centre of excellence and provide a service that’s not available to the organisation.”

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