The evolving role of purchasing

13 April 2010
I’ve recently been asked several times about the role of procurement. What do I see as our responsibilities and where does our remit start and end? The answer isn’t as straightforward as it used to be. Procurement has always had a strong role to play at the front end of any deal. The most valued capability in a procurement professional’s tool kit was the art of negotiation. Although negotiation continues to be important we’ve had to make room for new tools. To deliver the best sourcing solution to our organisations we are often called upon to operate across the whole sourcing relationship. We are expected to be knowledgeable of the supply markets we work in; be able to manage competing objectives across cross-functional teams; to identify sources of risk and plan to mitigate those risks. These are all skills that we’ve needed in the past but today we are expected to be expert and to take the lead. Perhaps the more exciting new capabilities are those associated with what happens once we have negotiated the contract. Indeed, I believe the capabilities we bring post contract will deliver the optimum outcome for our organisations. You can have the best contract in the world but if your organisation isn’t able to operate within its confines you will always have poor delivery. With the move to large multi-year outsourced supply arrangements the ability to understand our organisation and its potential is as important as understanding our suppliers. Procurement’s involvement needs to be from cradle to grave. At one time it was felt critical that we lead the team created to deliver the sourcing solution but, as cross-functional working becomes more common, I think this becomes less critical. It's important we ensure everyone on the team is aware of the process to be followed, the protocols that will be adopted and everyone is clear regarding responsibilities. In addition, we still need to bring to the table the strategic understanding of the supply market and the elements of the sourcing process itself. However, our strongest capability is in our experience of working with and leading cross-functional teams. We need to further develop our abilities to facilitate discussion which includes the ability to listen, to be demanding of the outcomes and to understand the organisations current processes. We obviously come into our own during the evaluation and contract negotiation processes but what next? The point where value is delivered back into the organisation is generally after contract signature and in most cases after transition to the new supplier. This is when procurement needs to step up, after all, everything delivered to here is entirely theoretical. A consistent theme with all major outsourcing deals is we contract for what we think we want – a mix of where we currently are and what we believe is leading edge contracting. It is only as both organisations try to deliver against these expectations that we understand the art of the possible. We need to take this learning back into the contracts and to both the supplier and buyer organisations. We must ensure both parties honour their responsibilities to the best of their abilities, are addressing the gaps in delivery and that the contract reflects the evolving relationship between the parties. Perhaps the most valuable capability we can develop is that of the learning organisation. Sam Covell is head of IS procurement at AstraZeneca (samcovell@hotmail.com)
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