Chief procurement officers have long viewed business process outsourcing (BPO) as a way to streamline operations, enhance efficiency and reduce costs.
BPO, however, can do so much more than that. Today, leaders in this space are increasingly looking at BPO as a way of adding value, enabling their procurement functions to play a more strategic role in the business. This involves using their BPO relationships to provide business insight, innovation, and solutions, not just cost cut. (more…)
When asking the question ‘how can procurement become more strategic in a business?’, a common piece of advice I have heard is to align the goals of procurement with the objectives of the business.
I have often wondered who isn’t trying to do this when setting the objectives for their department, given it seems lunacy to have the function moving in one direction, when the business wants to achieve something else. (more…)
We might expect businesses to take every opportunity to deliver stretching and sustainable cost reduction, never more so than in times of austerity.
Purchasing managers I have met tell a different story. Most have cost reduction objectives and many receive bonuses based on it. The target set is often 5 per cent, which is hardly stretching, on the basis, presumably, that 10 per cent seems too much and 0 per cent is not a reduction.
Salespeople have also asked me: “What is this ‘buyer’s 5 per cent’ we are asked for?” Sellers often respond by adding 10 per cent to their price so that they can take 5 per cent off: the target is achieved, everyone gets a bonus and the price goes up. (more…)
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