Purchasing, Buying, Sourcing, Supply Management, Procurement – all mean the same – all mean buying at the best price. It is not the purchasing of raw materials that provide the greatest scope for the rise of the procurement manager, it is in the area of services, travel, investments, and yes, conferences. This is the area of the greatest opportunity for procurement managers, and is also the area of the greatest spend within a company. An instant message, addressed to the recent gathering of leading PCOs at the IAPCO Annual Meeting in Athens, is that, if procurement strengthens and continues to improve, are you, as the sales force, keeping pace? Defending the position of the procurement manager, the figures speak for themselves. If you can save 1% from the supplier you will be increasing the profitability of the company by 10%.
Inevitably procurement is about the balance of power: the supplier-power v the company-power. The procurement department will wish to manoeuvre the power of the supplier to the power of the procurement department; diversity is the middle ground. The strength of the supplier is that they will undoubtedly know the product better than that of the procurement department; this gives the supplier power; the procurements remit is to reduce that power and to close the gap without putting the supplier from its position of exclusivity to one position of total dependence. The procurement department now understands the necessity of entering in a win-win partnership with the suppliers rather than a client/supplier relationship based only on costs.
