Is Purchasing getting enough importance across organizations ? A practitioner's critical view point
You might question the need for such a blog post at all. Who doesn't know that the Purchasing function has indeed grown in its importance particularly during the last 2 to 3 decades. Automotive, aerospace, retail and CPG companies have been at the forefront in building & promoting this importance over several years. They invested heavily into supply chain maturity, capability and enhancement and brought in several best practices like TQM, supply risk management, e-procurement etc. Other sectors and industry verticals followed too to imbibe these.
However, has this generated "enough" importance for Purchasing functions or not? This word is key and to measure it accurately, we first need to define ways in which this should be defined as metrics.
I would propose the three simple measures listed below. The measurement range or targets can be decided by each firm themselves.
- # of times purchasing topics made it to the list of the boardroom agenda out of the total boardroom meetings conducted
- % of time spent on purchasing topics relative to end customer needs & services topics in all the boardroom meetings conducted
- # of times a CPO/purchasing agent presented out of total board room presentations
Being part of several such groups either in my consulting roles or as a purchasing practitioner myself, I have seen Purchasing getting a disproportionately low importance relative to internal sales or customer service functions in particular by firms. My philosophy is simple. If firms can allocate resources to pay topmost importance to their clients/customers , why should they not pay at least equal importance to their own Purchasing functions. Why? Simply because the team in their Purchasing department is also treated as a "client/customer" by firms' suppliers. So firms must appreciate that Purchasing team is no less than clients/customers and provide importance, respect, focus, attention & investment. Till this is a board room mandate, purchasing will continue to add value but still not get enough importance.
What do you think? Want to extend the discussion or provide comments? Please go ahead and blog.