Earlier this week, Purchasing.com published a short but worthwile interview with Martin Garvin; the former CPO of Dell (Garvin stepped down earlier this year). One of his key messages was the need for procurement to take a step upstream into the business value chain and proactively work with product development.
If someone hired me to go in and in 90 days analyze a company and design an affordable and high-impact procurement organization, the analysis should focus on three areas. First, you have to establish where the money’s going. Secondly, you need to establish what are the most critical technologies to the company—sometimes that means cultivating new suppliers for a critical component. And then you need to establish which suppliers are most strategic—either because of their relationship or they’re most closely connected to your company. Beyond those three key areas, having organization leaders that can work cross-functionally is critical. If you can’t work with the product development organization, for example, then it’s a weakness.
Unfortunatly, many procurement organizations are still seen as a police force who spend their days telling the organization what they can’t do instead of proactively participating in the value generation of the business.
Hopefully, with the help of seniors such as Mr. Garvin speaking out on the subject, this will change for the better.
