Beyond Cost Savings

Dave HenshallInfluence, ProcessLeave a Comment

Procurement leaders must broaden the procurement agenda beyond cost savings and focus on growth and added value strategies.

Business Drivers

Procurement must link to the business drivers

Tomorrow’s procurement leaders must link procurement strategies to the businesses drivers for competitive advantage and focus on outcomes that provide advantage for their customers. To do this procurement must become an integral part of the organization’s growth strategy:

1. Create a compelling vision of procurement as a provider of competitive advantage for their customers rather than merely cost reducers.

2. Become an integral part of the organizations account management process by developing close relationships with sales and the end customer

3. Secure preferential treatment from suppliers.

a. Preferred access to capacity
b. Customer of choice for innovations See previous post.

4. Link suppliers into the supply chain to increase service to customers such as reducing time to market.

By understanding customer requirements and managing the supply base to capture the “value of growth,”procurement can generate additional funds with which to accelerate growth by funding new investments or additional incentives for customers.

Add Value

Procurement must be seen to add value

In order to sustain procurements contribution to growth, competitive pricing and services, there is a constant need to add value. The value derived from customer service features, quality, speed of delivery, innovation, and competitive pricing are all significantly impacted by the organizations suppliers.

Capable, motivated employees trained and skilled in managing supplier relationships are, therefore, critical.

Procurement must excel at this.

Nuff said …