You can define procurement in many ways,” says Bjørn Bergesen, Incentra’s Managing Director. “You can look at the perfect model where you have strategic and well-founded sourcing, with broad involvement and internal consensus. Or you could say that procurement is the department finishing off what others have decided.
“Regardless, in my opinion procurement should play a key role in the business, and to do that you need a plan, a strategy and some effort to find the right solution.” What determines the role procurement has and its influence on the organisation is largely to do with competence, according to Bjørn. In some organisations, procurement has a strong influence. The CPO reports to the board and is well respected internally while in other companies procurement is simply a desk in another department. “Authority is both given and earned. It doesn’t help if you are a CPO and you don’t know what you are doing and you can’t convince the organisation what you are doing. We have heard a lot about competence [at IMPA London].
“We should consider how we recruit procurement people. In some organisations, I have worked with people who were placed in the procurement department because they couldn’t do other things. I personally think procurement is where you should put your best people. They should be trained and developed.”
In most organisations, the role and work of procurement is under-reported and often not highlighted, according to Bjørn.
What is clearly a limiting factor on the department’s influence in the business is further exacerbated by what takes the place of proper communication: hearsay. “A lot of what people hear in the organisation about the procurement department is not fact based. If we continue to do as we have done we will not gain the respect or influence we deserve. “Do we always tell our stakeholders what we know? Or do we keep it to ourselves? Do we report results and achievements and do we produce analysis and justification for what we want to do? “This is absolutely under worked in many organisations. It needs to improve.”
Windows of opportunity
“There are other events that create a window of opportunity for procurement to step in and take a role.” One such development is the need to cut costs or save money where procurement’s core skills and competencies are well suited to the end result. Responsible Supply Chain Management (RSCM) and Corporate Social Responsibility (CSR) are also areas where procurement can step up.
“It’s [RSCM] becoming a very important topic. There’s an opportunity there for procurement to step up and play a role that will not only be listened to in the operational departments and the financial but in all parts of an organisation. It is something that is critical.”