Procurement is not a revenue generator?
This is not a whine post. I just keep hearing these things over and over and it merits discussion.
I was talking to a CPO of a very large energy company “X Inc”.
CPO: Unlike Sales, Procurement is not a revenue generator so we have a limited budget on our L&D . . .
I was shocked! It was coming from the top!
Some quick context 📝
She was leading the Procurement Academy at “X Inc”, which has 4 strategic focus areas: Category Management, Strategic Management, Supplier Management, and Change Management. The specific area of focus for meeting was Strategic Management capability building.
Their major outsourcing efforts were nearing completion and the organization was in a position to focus it’s personnel and practices on a more strategic angle.
Fast Forward ⏩
My presentation was very appealing to both her and to their broader employee base, as it increases their recognition and marketability, and also coupled with the positive results of outsourcing, could give employees a positive vision for the trajectory of procurement at “X Inc”
Identifying root case and pain points 🥷🏾
My team assessed their business and performance requirements and started our investigative interviews with employees at all levels with “X Inc”.
An uncommon problem 🪨
The procurement profession is the ONLY business profession in industry globally that has a completely unprepared and accidental workforce. Our research shows that over 99% of procurement professionals did not plan to be in procurement, did not study procurement, and learned from others who took the same unfortunate route.
The Mindset issues 🧠
Procurement department is viewed (both by themselves and other departments) and treated as a cost center while sales departments are heavily invested in as revenue generators. Executives inside companies don’t understand procurement value add, and as a consequence, procurement headcount is less than desired, enterprise systems and tools provided to procurement are not tailored to procurement interests, they just want procurement to minimize disruption and impediments when the company needs to buy something critical.
The final nail in the coffin 🕳️
The relegation of procurement to the back office results is the millions and millions of dollars in money left on the table and poor supplier performance results that suck the time and energy of not only procurement, but also the internal funding organizations that have generated the demand to begin with.
Our Thought Process and Plan 🐣
Who says Procurement is not a Revenue Generator? Come talk to me and I will show you, how it’s the other way round!
While all the tools and education is important and we will do that. But one thing that needs to change in the “X Inc” DNA is - We will aim to build not just effective, but visionary procurement professionals – those that will see procurement not just for what it is, but also for what it should be and what it can be.
All procurement staff at “X Inc” should view the procurement profession with this end state in mind. Even if the boardroom is not receptive to certain types of savings, such as indirect or soft savings and avoidance savings, you should still report them. Continue reporting them persistently until you can persuade them to acknowledge the value of such savings.
Simple, but powerful. Let me know your thought process in comments.
That’s all for now ✨
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