Procurement -online published an interesting article which gave a good insight into the development of procurement in Asia, but also sends a relevant message to those procurement functions around the world that have not yet secured a strong mandate from the board.

The article describes scenarios still recognisable by many in Europe or North America – a tale of unrecognised buyers, busy putting out fires and wishing they could devote more effort to more strategic activities that they know could add value to their organisations.

It is not all doom and gloom though, the writer talks to John Paterson, CPO of IBM, and
Ramesh Krishnamoorthy, Director of Technology Outsourcing and Professional Services for Asia and Japan, Global Supply Chain Services at HP, and Mark Sparrow, Director of Asia for Jigsaw Search who all are optimistic for the future.

Mark Sparrow say’s”

“The function has now opened the lines of communication through the business”,

whilst John Paterson say’s:

“The role of the buyer function has continued to drive value and gain visibility at the top of the corporation. Few organisations are as impactful to the company’s bottom line as procurement, which negotiates the costs of the goods and services we procure in support of our revenue stream, and average payment terms which generates free cash flow”

Whilst IBM and HP clearly benefit from their global status in securing their place at the table and utilising best practices, their presence and continued success sends a powerful message to others in the region who are perhaps not so mature in their procurement development journey – ‘build capability in procurement and supply’.

Refreshingly the article recognises that the mandate will not be handed to procurement on a plate and calls for more creative approaches from procurement. It also raises an issue many highly developed procurement functions have yet to properly address – that of stakeholder relationships.

Many procurement professionals are measured quite rightly, on their stakeholder relationships. Problem is, the way this is often done does not encourage these professionals to challenge business decisions, and encourages behaviours that don’t make waves. Procurements ultimate recognition will come when it’s professionals can challenge business decisions without the undue fear of stakeholder fallout.

How many procurement professionals relate to –

“We want to collaborate with our internal stakeholders, but at the end of the day we cannot tell them to buy into our sourcing strategy.”

Why not? If a company wants to excel on its buy side activities and maximise benefits from a high-performing procurement function then it must be clear, right from the top of the company, what procurement is there to do. If there is silence, people will draw their own conclusions and nothing will change. Before this can happen however, procurement must continue to build capability and prove their value to the business.

When this is done the Brave CPO will demand the mandate.

Nuff said …