E-Sourcing Forum » Procurement outsourcing is set to grow in 2007

Procurement outsourcing is set to grow in 2007 – we are all doomed!

January 25th, 2007 at 01:46am Sean Delaney - Iasta UK

Paul Snell in the 4th January edition of SM (that’s Supply Management!) discusses the merits of procurement outsourcing. There seems to be quite a storm brewing…..

I’m much more pragmatic about all this. Having come from retail buying this is nothing new. M&S often relied on suppliers to design and develop new product. In fact supplier appraisals would be partly based on their design ability.

The outsourcing of procurement is an enabler allowing lower skilled tasks to be outsourced to organisations, which with economies of scale they can lower the cost of each transaction.

One of the contributors to the article argues that many buyers are concentrating on more “high-value” procurement activity and neglecting indirect spend. Although this comment maybe true I believe that the indirect spend will not be the first to be out sourced. My current understanding is that many organisations are still currently trying to understand the spend data within indirect. I really do not believe businesses will outsource areas of their business they do not understand!

I think the furore about this whole issue lies closer with the individuals within the procurement function. I have often read comments from senior buyers suggesting that Procurement should be main board role. Whilst I do not disagree I cannot see businesses promoting individuals to a board role who have only procurement experience.

Having CIPs qualification, whilst admirable and an excellent base to start from, will only advance you so far within an organisation. Any Sales experience? Marketing? HR? It is worth noting that you will often see retail buyer’s advance to main board positions why? Well because they have skills like sales development, marketing, sourcing and distribution. The exact skills for board recognition (BTW - I have never met a retail buyer with a CIPS qualification!).

So what is my point? Those individuals with broader experience are more likely to embrace outsourcing allowing them to advance their position within an organisation. Those individuals who feel threatened by this process are likely to have less broad business experience.

Procurement Outsourcing should be welcomed with open arms. It will enable buyers to concentrate on more strategic issues. It will also put buyers higher up the food chain however to get all the way to the top, buyers will need to have more diverse experience.

The debate should be more pragmatic and less about job protection.

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Entry Filed under: General, Supply Management Best Practices

1 Comment Add your own

1. E-Sourcing Forum: the sou&hellip | April 24th, 2007 at 4:42 am

[...] It is a great testimony to the role procurement that they can now attract individuals from other professions. I think it reflects the opportunities that now lie in this category and also the high regard this function holds within some organisations. Having this experience is essential for progressing further within any organisation as I discussed here before. [...]

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