Over the past 25 years, the role of procurement within companies has changed dramatically from that of simply buying goods and services to overseeing an integrated set of management functions. Procurement has crept into every aspect of management, from category management to managing supplier relationships, contracts and payments, and strategy. As companies look beyond short-term costs and the scope of procurement-related issues has grown, procurement professionals are paying more attention not just to what they spend on goods and services but to the broader costs of operating, maintaining and replacing the items and resources they purchase over time.
Despite procurement’s increased level of importance, it has yet to achieve the high-level recognition it deserves. There are two main reasons for this. First, it is often difficult to document procurement’s specific contributions: Were the cost savings the result of skillful negotiations with vendors or a fortuitous shift in the market? The financial benefits of a favorable procurement deal often extend beyond the initial purchase price to other aspects of performance (for example, improved working capital or reduced financing costs), so there is more than one bottom line to consider. Second, the line between the responsibilities of procurement and those of other stakeholders can be ambiguous. The result: Procurement often shares whatever successes it achieves with other groups; in failure, however, it typically gets all the blame.
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