From Support to Strategy: An Evolution of Procurement
Until recently procurement was considered as a passive and support function. However, with an increasing requirement for organizations to focus on cost optimization, improve business effectiveness & efficiency to remain competitive; there has been a movement of the procurement function to being a strategic partner, playing a pivotal role in the success of the organization.
Modern procurement is an integral function for organizations, operating in coordination with other functional areas rather than in a silo. Top managements are realizing the profit-generating capability of procurement and its influence in providing a competitive advantage. Successful transformation of procurement function enables organizations to drive continuous cost savings on both ‘procurement cost’ and ‘cost of procurement’, mitigate risks and raise supply management transparency.
The role of procurement function has evolved into capturing value across an organization’s supply chain: streamlining processes, reducing procurement costs, identifying better supply sources, and building enduring relationships, thereby impacting the company’s bottom line.
Another critical value shift is automation of manual processes to create an efficient, agile and transparent managed function. Technology-driven, automated procurement processes reduce supply chain bottlenecks, free up resources to focus on strategic work, and generate new business opportunities.
To achieve this level of sophistication of fully integrating procurement into strategy and influencing organization’s profitability, procurement function must develop to a level where it plays a proactive role in working with other departments to formulate and implement competitive strategy and improve decision making.