Profit from the Source

Many companies don’t extract the greatest possible value from their procurement department, warn Boston Consulting Group partners Christian Schuh, Wolfgang Schnellbächer, Alenka Triplat and Daniel Weise. Arguing that companies too often regard their procurement team as having only one role – saving money on supplies and manufacturing, they confidently suggest a new paradigm: Integrate your procurement team into product development where its unique expertise can bake savings directly into design and production. Rather than have the procurement team fight suppliers, involve it in the entire product-development process and monetize its insights.

Procurement

Few CEOs devote time or attention to procurement, although this function typically accounts for more than half a company’s budget. And, most chief procurement officers (CPOs) have little input into their company’s strategic planning or product development. This is a waste of expertise.