Dissecting Procurement: Why the Whole is Greater Than the Sum of Its Parts?

In a recent PF watercooler discussion, the following response to a question regarding the differences between strategic sourcing versus category management is noteworthy:

“how do you differentiate Strategic Sourcing and Procurement? I came from an organization where Procurement Managers handled both sourcing and management of categories, so I’m still wrapping my head around the idea of separating these functions.” – Neil D.

Neil. D’s comments are insightful as they intuitively sum up the ultimate futility of such debates as they reduce our profession to a series of different or siloed functions. By focusing on functions, it becomes easier to lose sight of the bigger picture.

You may be wondering how by asking the question do we lose sight of the big picture?

A series of reports, between 2013 and 2018, in which most CPOs indicate that they did not believe that their procurement teams had the necessary skills to meet their strategic objectives validates the above assertion.

Think about it for a moment, at a time when businesses require a broader, end-to-end involvement in every area of the extended supply chain, is the dissection of procurement into a series of siloed functions or position titles productive?

 Owning the Whole

At the risk of repeating the obvious, the COVID-19 pandemic has forever altered the business landscape. As a result, organizations do not need specialists; they need “expert” general practitioners who are well-versed in all areas of a global procurement practice, including strategic sourcing, category management, and even risk management.

In this “new normal,” procurement professionals must actively seek to “own” the entire supply chain from sourcing raw materials to the final delivery of a product or service to the end customer.

Today’s article provides an initial framework for procurement professionals to rise to meet the challenges of this newly expanded responsibility and achieve maximum enterprise impact.

However, and before we proceed, we are not suggesting that one person handles everything. We are saying that all procurement professionals should have the ability to step in at any point in the end-to-end supply chain to confidently manage a specific function. Think of it as having “skill agility.”

Beyond a Functional Role

Even before the pandemic, the emergence of digital technology, including RPA and AI, was “shifting” procurement’s focus from a functional to a strategic role.

The question is, what do we mean when we say “strategic?”

An article on the 21st-century procurement department zeroed in on some of the critical attributes that “modern purchasers” must have to deliver on the “higher-level responsibilities” of their position.

These include:

•     Analytical skills (particularly in financial analysis)
•      Advanced computer expertise
•      Contract management
•      Project management
•      Relationship building
•      Strategy development
•      Negotiation

As you will notice, the above skills are strategic versus functional or position-specific.

Having this set of diverse capabilities will enable you as a procurement professional to take on any responsibility within the extended supply chain—including strategic sourcing or category management.

Returning to Neil D’s challenge with “wrapping” his head around the “idea of separating these functions,” the answer is simple: don’t think about the individual functions within the supply chain. Instead, focus on developing skill agility.

As you consider the above know this; having a plug-and-play capability to respond to any situation that may arise extends your range of impact and opens up new and exciting career growth opportunities.

In short, everyone wins when you look at the big procurement picture through a strategic versus functional lens.