Put the PR back into procurement

Put the PR back into procurement

Posted by Pete Loughlin in Procurement Best Practices, Procurement Process, Supply Chain, The Rest 16 Mar 2011

I despair sometimes. There’s been a couple of threads in the purchasing and supply chain media recently that seek to justify the role of procurement. There was Peter Smith’s recent spirited defence, (here), of the procurement profession in response to David Cameron’s naive attack calling purchasing professionals the “enemies of enterprise”. And then there was the article in Supply Management “CFO focus on savings ‘does procurement a huge disservice” which high-lighted some research by Ardent Partners revealing a misperception of the role of procurement by most CFOs:

”Savings for most CFOs remain the primary and, in many cases, the sole measure of procurement’s performance,” it was claimed. “…but a focus on it to the disregard of other key metrics does procurement and the CPO a huge disservice and devalues their contribution. More importantly it can serve to limit procurement’s actual contribution to the business.”

Why is the procurement profession so poor at PR?

There’s a wide spectrum of opinion of the value of procurement but the profession does itself no favours with it’s lilly livered self justification sometimes.

“We save money.” – Really? How many times have we heard people say “My computer at home is faster than this – and it was cheaper”.

“We manage risk.” Oh please – you sound like an auditor – at least they admit they’re boring.

Procurement needs to tell a more exciting story and to blow its own trumpet a little louder.

World class purchasing and supply chain management

Take the fashion retailer Zara as an example. Founded in 1963 by Amancio Ortega it’s parent company, Inditex, (59% owned by Ortega), has more than 5,000 stores in 77 countries. It is still growing rapidly, especially in China, where it will open 80 more stores in 2011. The secret of its success? – world class procurement and supply chain. Why? – because it delivers speed and agility. It takes Zara just 4 weeks to transform a new fashion idea ready to wear fashion in the shops. That’s what world class can deliver. A tightly run ship, most manufacturing is done in Spain where the logistics hub is based with 34% outsourced to low cost countries in Asia.

Hennes & Mauritz (H&M) of Sweden can tell a similar story. It doesn’t have the agility of its rival Zara, responding to fashion trends in months rather than weeks, but by outsourcing 65% of it manufacturing to low cost countries it has achieved a lower cost base.

Who said procurement wasn’t glamorous?

Perception is reality and the reality is that procurement is perceived to add no value in many organisations. It’s the perception that has to change. And it can.

 

Acknowledging a great article in the Economist here

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