Procurement Moves from Tactical to Strategic

Procurement certainly has come a long way.

The simple definition of "procure" that everyone knows is "to obtain, buy or acquire." A more complicated definition would be something such as "obtaining goods and services from requisition to receipt and approval of invoice payment."

Today, procurement (as "BUY") plays a crucial role in all aspects of the supply chain mega processes of PLAN – BUY – MAKE – MOVE – STORE – SELL/DELIVER.

The new Tompkins Supply Chain Consortium report "Leading Procurement Practices: Trends of the New Procurement Organization," notes that procurement is shifting from tactical to more strategic activities.

In the past, procurement was very much a transaction-oriented process, whereas today it is a strategic initiative process. The shift from tactical to strategic can be attributed to procurement activities such as market knowledge, supply base management, risk management, and supplier selection, However, the core functions of strategic sourcing, purchasing, procurement IT and supplier relationship management are also still highly important.

Procurement is beginning to add value to the company through strategic alliances and advanced competitive analysis. And as the function gains ground, supply chains are demanding more skilled procurement professionals.

Some of the best and brightest are currently seeking careers in the procurement field, and they need to understand how to be effective in today’s complex supply chain environment.

Organizations are looking for broader experience in procurement due to increased globalization. This includes advanced relationship building and multilingual skills. Even professional societies are providing certification to enhance the skills of the professional workforce.

The Consortium report also indicated that the number of colleges with supply chain and procurement degrees is on the rise. So, I think it is safe to say that involvement in procurement is higher and will continue to advance further into supply chains.

What is your company’s current take on procurement? Is the evolving nature of procurement affecting how you hire staff?

Jim
Tompkins Associates