There is one common, less noticed trait about all companies with successful supply chain operations; they know the value of an effective procurement organization, and have placed a great deal of emphasis in creating/transforming them around a strategic vision. However, only a small percentage of businesses globally can claim this success. Most companies lack the vision and thus have seen their procurement organizations evolve organically, developing around the needs of the time and constraints of supporting revenue growth. This blog post provides insights into what defines the second type of companies and how change at the top, supported by long-term vision, can help a firm change for the better. Businesses have developed practices of utilizing the resources and teams available to them to focus on their immediate needs. With top lines receiving a significant emphasis, procurement organizations have been asked to focus on getting the right material in time, but rarely on quality and best cost. Alternatively, when bottom line results are at risk, procurement teams have been asked to generate additional savings to meet quarterly or annual targets. It is only during times of extreme commodity price volatility and spikes in cost of goods sold (COGS), that teams are created to focus on managing commodity risks and price fluctuations. Competitive forces, lessons learned and recommendations from resources new to the firm or from consultants typically drive the situations described above. However, these are implemented as stand-alone projects and rarely translate to a long-term strategic vision. Procurement and Corporate leadership seldom evaluate a procurement organization from a holistic viewpoint.
The Impact of Leadership on Procurement Organizations
There is one common, less noticed trait about all companies with successful supply chain operations; they know the value of an effective procurement organization, and have placed a great deal of emphasis in creating/transforming them around a strategic vision. However, only a small percentage of businesses globally can claim this success. Most companies lack the vision and thus have seen their procurement organizations evolve organically, developing around the needs of the time and constraints of supporting revenue growth. This blog post provides insights into what defines the second type of companies and how change at the top, supported by long-term vision, can help a firm change for the better. Businesses have developed practices of utilizing the resources and teams available to them to focus on their immediate needs. With top lines receiving a significant emphasis, procurement organizations have been asked to focus on getting the right material in time, but rarely on quality and best cost. Alternatively, when bottom line results are at risk, procurement teams have been asked to generate additional savings to meet quarterly or annual targets. It is only during times of extreme commodity price volatility and spikes in cost of goods sold (COGS), that teams are created to focus on managing commodity risks and price fluctuations. Competitive forces, lessons learned and recommendations from resources new to the firm or from consultants typically drive the situations described above. However, these are implemented as stand-alone projects and rarely translate to a long-term strategic vision. Procurement and Corporate leadership seldom evaluate a procurement organization from a holistic viewpoint.