The bright side: more companies are promoting top buyers to the ‘C’ or ‘VP’ level. The downside: procurement must still battle the perception that it’s just a cost center. Here’s how purchasers are gaining notice for their department:

Aside from shaking off the long-held view that procurement is a solely tactical operation and a spend center, purchasers must also compete with other divisions to obtain resources for their strategic sourcing initiatives. Fortunately, they’re making some progress, says a recent Purchasing Magazine article. “Procurement continues to shed its back-office reputation, with 60% of companies now using their procurement expertise to help set, rather than just execute, corporate strategy,” John Blascovich, an A.T. Kearney vice president, tells Purchasing Magazine. He recently headed a study that explored the significance of purchasing and the supply chain in the corporation.

The study found that two-thirds of surveyed companies count at least one senior procurement executive among their executive managers–a big jump from 40% in 1999. “CEOs see procurement as an increasingly important and strategic capability and are looking to their procurement organizations to create value in their organizations beyond cost-reduction efforts,” concludes the report.

But not all companies realize the strategic value of the purchasing function. As a result, procurement and supply chain leaders must shoulder not only the functional demands of their job, but also take responsibility for communicating the contributions of their department to top management in order to get capital. They must convince higher-ups that their ideas and initiatives deserve to be prioritized.

Securing face time with the company’s senior leadership is imperative. But this can be challenging for many procurement executives–with its level of difficulty depending on the company’s internal reporting structure. “The closer that the top procurement or supply chain executive is to the senior leadership, the more effective the ‘selling’ will be,” opines article author David Hannon. According to Lowell Hoffman, a consultant with Global Sourcing Solutions of Chapel Hill, North Carolina, the procurement function is usually nearer to the CEO in a consumer products goods (CPG) company and enjoys more proximity to manufacturing and finance in more cost-centered process industries.

To gain support for their initiatives, purchasers should make the most of what little time they get with the CEO or board members. They should be detailed enough to get their points across but not bog down their presentations with unnecessary information. For example, Lisa Martin, vice president of global sourcing at New York-based healthcare giant Pfizer, favors brevity when meeting with the chairman. “I see him only when I need do,” she tells Purchasing Magazine. “I usually keep the presentation short–from three to six slides–and I always include [the actions that] I need him to do. If I don’t need him to do anything, I won’t take up his time.”

Another good tip is to take the company’s goals into account and discuss purchasing initiatives in terms of those objectives–something that Deb Lynch, director of sourcing and supply management at outdoor products maker Toro Co. in Bloomington, Minnesota, recommends. “Our cost savings or supply chain plans are integrated into the corporate planning schedule [so we can obtain] resource allocation,” she tells Purchasing. Also an effective tactic: presenting your ideas one level at a time, beginning with other business leaders, then the CEO and eventually, the board of directors. This way, you can gain support for your initiatives from decision-makers before discussing them with the board, says Gene Tyndall, associate director of the supply chain center at the University of Miami and former executive vice president at Ryder Logistics.

In short, while procurement has made much progress in gaining recognition as a strategic function, procurement executives still have a lot of selling to do along with the buying.

Source:

Face Time
David Hannon
Purchasing Magazine, March 3, 2005
www.purchasing.com/article/CA508497.html