The procurement process is a microcosm of the company overall. The evidence is that a significant improvement in its effectiveness not only achieves direct cost reductions but more powerfully benefits the culture and performance of the business overall.
Dr. Richard Russill
Focusing on the tactical significance of the procurement function, operating in isolation within organisations, much academic and consultancy research currently tends to concentrate on the achievement of optimum supply market decisions within an established arena -
Procurement will stay a tactical activity, aimed at achieving specific tasks or results-orientated goals, if the primary question remains one of how to apply specific tools and if senior and middle management fail to understand value chain dynamics. This may contribute to the delivery of business results but it will not release the full potential to be gained by integrating procurement into mainstream business strategy development and decision logic, nor will it lead to the creation of effective demand management. Put simply, the integrated business model is "we buy, we transform, we sell", or in value terms, "we acquire value, add value, achieve or realise value".
In the future, a clear distinction will be made between procurement as a largely tactical activity and the multi-functional acquisition process itself, within the business strategy environment. In organisations where the process is be well understood and integrated, procurement will provide the umbilical cord between internal supply chain demand and external supply response. It will have a major role in creating the right climate for profit generation.
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