Avoiding the Procurement Rabbit Hole

September 10th, 2007 at 08:22am David Bush - Iasta

Booz Allen Hamilton has recently released a free white paper, entitled, Avoiding the Procurement Rabbit Hole. BAH gives good insight into the complex nature that procurement has become since the genesis of strategic sourcing in the 1980s. From the executive summary:

Procurement leaders have worked hard to build functional excellence. But to safeguard and enhance their status, they now need to take a broader view.

But today, this procurement reinvention has stalled in many businesses. Many CPOs no longer pursue influence along the supply chain; they no longer strive to engage their peers and suppliers to tackle the underlying drivers of cost and value. For a variety of reasons, from needing to chase short-term stretch goals each year, to a lack of interest from other functions, many CPOs have implemented more and more sophisticated ways of improving the procurement function itself, while neglecting coordination with the wider organization. E-procurement, e-auctions, spend analysis, and procurement outsourcing are all examples of how procurement has focused inwardly over the past five years. By pursuing ever-increasing functional depth, however, procurement is in danger of following Alice’s steps in Wonderland and falling down its own rabbit hole.

The report is very good and comprehensive for being only 11 pages (which is refreshing). Of course, it’s written from the consultants POV but the points are valid that effective strategic sourcing has many faces. Reliance on just one or a few methods will never solve long term problems and finding the proper mixture is the key to a successful and viable strategy.

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Entry Filed under: Analysts/Research, General, Supply Management Best Practices