From Buying Cheaper to Spending Smarter

Procurement professionals are instrumental to the success of organizations. They are accountable for innumerable initiatives ranging from solicitation to evaluation of suppliers plus everything that falls in between. Procurement has a significant impact on the organization as a whole – congealing its spot at the management roundtable.

Editor’s note: This excerpt is from article in the MyPurchasingCenter content archive. It was originally published in 2015 and appears here with minor technical revisions.

In the 1960s, a Chief Procurement Officer was largely unnoticed; today, procurement leaders are facilitating their organization’s growth and helping them reach strategic their and operational goals. 

Over the past few years, Oliver Wyman, a global leader in management consulting, has interviewed more than 100 CPOs across North America and Europe from a variety of industries. The firm’s global sourcing expertise, combined with its partners’ collective insight, and business initiatives spearheaded by procurement organizations gave birth to the book, The Procurement Playbook- Strategies and Plays from 100 CPOs (available here for download). Damien Calderini, CEO and president of entegra Procurement Services and contributor to The Procurement Playbook shared some interesting insights regarding the book with My Purchasing Center.

The playbook instrumentally brings today’s procurement challenges into the limelight. “We have structured the book in two main parts,” says Calderini. “The first part emphasizes the objectives of procurement, from evident cost reduction to risk mitigation and even contribution to revenue and growth. The second half of the book addresses the five dimensions of the procurement operating model: strategy, processes, organizational structure, HR and systems. For each topic, we have collected insights from leading CPOs (mostly in Europe and North America) and they share with their peers how they have dealt with challenges.”

The Procurement Playbook looks at the evolution of procurement, i.e., moving from “buying cheaper” to “spending smarter.” According to Calderini, for procurement professionals, it implies that capabilities have changed and continue to evolve. Now, procurement professionals are not only expected to have basic procurement skills but also management skills such as strategic thinking, analytical expertise, financial skills, communication and project management. The results of a contemporaneously run survey showed that CPOs aspire to become a strategic partner but less than a third are actually delivering at that level.

The Procurement Playbook also gives examples of business initiatives spearheaded by procurement.

Before wrapping up the conversation with My Purchasing Center, Calderini advised procurement professionals going forward that the evolution in procurement is still on. “Procurement is a great function to be in today and will only get more important,” he says. “They have to be an agent of change internally.”