Procurement has come a long way from a purchasing center to being considered as a strategic partner. Prior to World War, procurement or purchasing was primarily clerical. With evolution of simple trade era to production era, following industrial revolution there was mass production and thus increased purchasing. During World War I and II, it started gaining more importance as raw materials, supplies, and services needed to keep the factories and mines operating increased.
The way procurement is being viewed is slowly but surely changing. Now the focus is to move away from being only a cost savings centre to a growth partner. The increasing share of material costs and purchased services in major global organizations Profit & Loss account highlights its growing significance.
The need to align procurement objectives with that of the organization is becoming a necessity. However, tracking and aligning procurement performance and ensuring its impact on company’s top line is difficult as the supply chain has become more complex.
Using tools like excel sheets or homegrown tools to track and measure procurement performance present the companies with loopholes like lack of visibility into company’s savings, maintaining & difficulty in managing company wide procurement data.
It also poses problems like lack of or expensive upgradation, inability to configure with the spend analysis tool, lack of security, lack of collaborative platform or user role definition. All this mandate the use of an advanced technology to manage procurement performance.
In the next post we will explore the possible ways to manage modern procurement woes and thus better performance.
