THE BUSINESS REVIEW FOR PROCUREMENT LEADERS
In hard times, procurement shines as an integral part of the cost-cutting challenge. Most of the procurement legends have occurred in industries where reducing absolute cost was a strategic priority.
But the up-cycle, where the business is focused on growth, is very different. Other functions are less willing to invest time and attention to what they are buying and how they can do it better. Procurement is limited to cutting price without changing any of the fundamentals.
There are three plays a CPO can deploy to ensure that procurement stays on the top management agenda during the up-cycle. The "supplier-driven customer value play" is about securing preferential access to supplier capacity or being first in the queue for innovations.
The second strategy, the "growth through acquisition play", focuses on achieving procurement savings during and after a merger. Lastly, the "value of growth play" takes advantage of scale economies among growing suppliers, providing additional funds for investment.
Thriving in the up-cycle requires finding the right hook into the top management agenda; sharing value with suppliers; repositioning procurement to appeal to internal clients; and preparing for the next down-cycle.
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