Not every company is large enough to have a Chief Procurement Officer, embedded in the C-Suite, with direct access to the Chief Executive Officer, the Chief Operating Officer, and the Chief Financial Officer. But there is a strong case to be made that procurement is too vital not to be integrated with every aspect of the firm: marketing to determine what products to offer customers, product design to optimize the development of these solutions, financial management (including merger strategy), and sales.
Having sourcing engaged strategically from the earliest stage leads to more informed decisions, at a point in time when it can have a real impact on profitability.
“’High-performing procurement teams are involved in strategic business and supplier collaboration activities, ranging from mergers and acquisitions to corporate risk planning and new product/service development,’ the study stated. ‘However, a significant number of CPOs and procurement leaders acknowledge that they have a business partnering skills gap that needs to be closed.”
Having the intention to involve procurement teams more strategically is a good start, but it is insufficient. There must be changes in business processes that make the sourcing process accessible for a wider array of leaders within the firm from every department: marketing, research and development, finance, and sales. And this need for real intelligence extends all the way through the executive leadership to the Board.
If anything, 2018’s threatening discourse about globalization highlighted the fundamental risks involved with sourcing.
Consider Lenovo for example, where “Offering Delivering Teams — ODTs — that work across different product portfolios and prepare for the next generation of products. These teams are led by senior product managers within Lenovo’s business units, and include functional project managers and representatives from departments such as system support and quality control … In this way, we make sure procurement is integrated more deeply into the strategy of the business.”
Corporations exist to take managed risks in the delivery of goods and services that benefit their customers. If they don’t deliver goods and services that customers value, or if they fail to manage risks properly by increasing exposure and decreasing exposure prudently, then they will wither and die. The market intelligence, the connections, and the judgment that sourcing brings to the table is an under-utilized resource internally, too often.
EdgeworthBox takes a “network-based sourcing™” approach to procurement, mimicking what we see in financial markets. Our SaaS-enabled marketplace adds three buckets of tools to an engine for executing RFPs: a clearinghouse for administration, a clearinghouse for data, and social networking tools. In effect, we provide the apparatus for sourcing to bind onto every other key part of the enterprise to give them the benefit of market intelligence, collaboration with the outside world, and experience. Product managers, sales people, and finance managers don’t want to sift through an ERP system or a standalone sourcing solution. EdgeworthBox gives them an easy-to-use interface for getting at the people and the value hidden in plain sight within their own organizations. Give us a shout. We would love to talk to you about procurement.