Thursday, August 18, 2022

Profiting from strategic procurement

Executives the world over are recognizing that effective procurement strategies are the high road to cost savings and competitiveness.

An IBM global survey of 300 senior executives — including 95 chief procurement officers (CPOs) — demonstrates the rapidly rising importance of procurement in the enterprise supply chain. According to 64 percent of respondents, enhancing procurement strategies would generate greater savings for their companies, while driving future growth and competitiveness.

Procurement has grown in prominence much faster than many other functions, according to David Stevens, a partner and supply chain management lead at IBM Canada Ltd. He said the role of procurement personnel is also undergoing a very fundamental change — from buyers to negotiators, and from transactional order placers to strategic business managers.

According to the study, as technology enables global and often borderless commerce, worldwide sourcing of direct materials now tops the list of procurement strategies. China was cited by 60 percent of respondents as their number one destination for supplies.

To respond to the new procurement dynamic, CPOs must equip their staff with needed skills and expertise and “must do so in record time,” the study said. CPOs ranked staff improvement initiatives highest among their strategies to enhance procurement performance. The top three strategies were all people-focused: management and retention of talent, upgrading people skills, and training staff to improve core procurement skills.

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Jim Love, Chief Content Officer, IT World Canada

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