Procurement's priority

By Jake Kanter

Speaking to the CPO of a UK retail giant recently, he told me the number one duty of a procurement function is to get costs down and deliver savings for the business.

Now many will raise their eyebrows at this mantra, which is so often associated with the retail industry. Indeed many supermarkets traditionally gun for savings, usually at the expense of suppliers.

Other readers will champion the array of skills procurement brings to the table, including delivering value for money and mitigating risk.

But if you were pushed, what would say the first priority of a purchasing department is? Is this ever likely to change?

Comments

[Mike Dickson, MCIPS]

Having been involved in change management and delivering quantifiable savings to companies, in my humble opinion the first step in a new role in a company is analysing the business processes used. Once you have established how things are currently being executed, then you can look at improvements which contribute to the effectiveness of the business as a whole. This in itself leads to savings, albeit not immediately as tangible as "we reduced the price of apples by 20%).

It's far too easy to go for the quick kill & say reduce the price paid for goods. Additionally, this is not always possible (& certainly difficult in a depressed market).

[bitter and twisted]

The duty of a procurement department is exactly the same as the duty of every other department in an organisation.

[Steven Letham]

I'd say procurement's number one priority is understanding the requirements of / and working closely with internal stakeholders to help deliver their objectives

If you do this well cost savings will be a consequence (as well as better quality, and other benefits to the business)

[Ayande A.B Prosper]

The number one priority of a procurement function is adding value. Value adding can only be said to have been achieved in procurement when cost has been cut down, savings made,risk minimized whilst adhering to legal and ethical requirements.
Let us not also lose sight of the five "rights", the foundation upon which procurement is build.