In this video, Interim Procurement Director, Kieren Curry discusses one of the most common procurement trends we see: organisations not appreciating the strategic value that the procurement function can bring and the difference between cost versus price.
One of the most common complaints I encounter when speaking with candidates is that they’re moving on because they feel undervalued as a strategic resource. It’s something backed up by Fusion21’s Procurement Trends Report 2019, where “26% said their role is not considered to be even slightly strategic.”
I’ve recently been working with an exceptional Interim Procurement Director, Kieren Curry, whose achievements include producing 12% annual savings on a £330m category with a strategic approach.
So who better than to provide unique insights into why procurement is often undervalued or limited in their approach?
Here’s what Kieren had to say (with the transcript below):
If you’d like to discuss what strategic-thinking procurement professionals like Kieren Curry can bring to your organisation, call us on 0333 121 3345 or email: firstname.lastname@example.org
I think the problems are that people don’t understand what procurement can bring. Also, the definition of procurement I think has become very narrow over time. Different industries have different views on what procurement can bring to their business. And they’re kind of split into two.
You’ve either got organisations who are looking for very short-term wins or short-term gains, so the person that’s in procurement is charged with saving a few p here or a few pence there. And that’s considered a win but then you’re onto the next short-term win and the next short-term win.
And then you have organisations that actually want to understand and have a supply chain and a procurement function that tie in. So, they understand exactly where all their materials or the people that are working for them or the subcontractors, or whatever it is – where they come from, how they’re managed and how they’re taught. You know, they actually fully want to understand the risk that goes behind it.
And each industry seems to have a very different but quite set view. So in manufacturing the procurement department would be part of a supply chain department, so the view is a lot wider because in a supply chain you want to understand where you’re getting your materials or your people from. You want to understand where the raw materials have come from or what their skills are, so you do a lot more looking back through your supply chain and making sure that everything you’re doing is correct.
So a good example would be something that we’ve spoken about, that at Hotpoint, for example,
They had to recall all these tumble dryers because a certain piece of rubber was perishing too quickly. And now they’ve had lots of fires, thousands of recalls and engineers running around all over the country.
Aisha Farndon (interviewer)
And the reputational damage…
Exactly. And, you know, somebody probably saved, or possibly saved, 2p on that rubber flange but the cost has been phenomenal.
And I think that’s the real difference. It’s that, regardless of the industry, it’s that business’ understanding of cost versus price. They’re very different things.
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