Procurement’s Transformation from Tactical to Strategic

Summary

Procurement functions in most companies are facing a dilemma: should they focus on tactical measures to save cost or on maturing into strategic functions? Does a middle ground exist? Invariably, companies give in to cost-saving pressures. After all, every sourcing dollar saved accrues to improve the bottom line, top line and balance sheet. In this trade-off, the opportunity to become a strategic partner, aligned closely with business goals, is lost.

In order to enhance their function’s strategic quotient, procurement leaders need to employ certain enabling levers:

• Look beyond delivering dollar savings to the bottom line. It is crucial to align with the overall business strategy and dovetail strategic procurement initiatives to realize business objectives

• Address challenges such as stakeholder engagement and expectations, resource management and skill-set gaps to maximize strategic contribution

• Treat the 'shift in mindset' from tactical to strategic as a change management exercise that requires a deliberate and programmatic approach

For businesses operating in a hyper-competitive market, procurement’s evolution into a mature strategic function is a business imperative. The function’s evolution will catalyze the achievement of business goals and boost responsiveness toward stakeholders’ strategic pressures.

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