In Part 1 (click here to see part 1) of the 2 part series we had discussed 3 myths that condemn procurement to organizational hell. In this section we will discuss the remaining three.
4. The only teams that the procurement team needs to establish collaborations with are the quality management and engineering teams
During much simpler times the only activities that procurement was responsible for were logistical and clerical. These were further advanced to negotiation and collaboration with suppliers to achieve best margins and generate cost savings. When the role of procurement was restricted to these activities it could work in isolation or at the most co-ordinate with the quality management and engineering teams. The picture is very different now. Procurement is now a strategic enabler contributing in various strategic initiatives like new product development, new market exploration, price determination etc. Thus it becomes imperative for all other key functions like marketing, sales and financeto collaborate withprocurement.
5. Low Cost country sourcing translates into automatic savings
The transition to low cost country sourcing has been swift and all pervasive. Organizations particularly in the manufacturing domain have taken to this approach like there is no tomorrow. Procurement of course is at the forefront of these endeavors and often the only thing looked for in these initiatives is the lowest price. After all, if the price is lowest the cost to source is the lowest- Couldn’t be farther from the truth. There are questions that demand logical answers before making the decision to source from a low cost source.
6. Procurement recruits just need to be good at numbers and managing costs
Typical traits that are put forward when requirements for procurement professionals are put forward during job searches: Analytical, should be good with numbers and should be a tough negotiator. As mentioned above, when the role of procurement was logistical, clerical and the only aim was to get the best cost savings, these traits would do. The need now is for a new breed of procurement professionals.
Purchasers should be tech savvy and sensitive to market conditions. They should have the capability to lucidly communicate with both internal teams as well as suppliers. This requires the ability to think logically and predict what if scenarios pro-actively. Of course negotiation skills are a pre requisite for this role but they are not the be all and end all of the skill set of procurement professional. Often it is accepted that procurement professionals are not experts in the products they buy but that does not mean that they cannot be trained to develop the desired technical know-how as well as show an appetite to expand their horizons when it comes to using technology to augment or rather better their current processes.
Eliminate these 6 beliefs from the core thought process of your organization and the path will be paved for procurement to harness its full potential.