Procurement has been focused on transactional processing for most of its history, and has entailed next-to-no strategic decision-making responsibilities. The typical purchasing routine has traditionally been simple: you receive a requisition, solicit bids, evaluate offers, place the purchase order, expedite it when necessary, and resolve any invoice discrepancies. This process has left little room for strategic decision-making of the kind that is involved in supply sourcing, and left even less room for discretion. Furthermore, it has widely been estimated that, even as late as the 1990’s, less than 60 percent of an organisation’s supplier-related spending was controlled by any part of the procurement organisation.
Today, this is certainly no longer the case. Procurement has evolved into a strategic element, and has justifiably moved towards the centralised control of spending, for purposes of cost reduction, compliance, and risk management. In fact, many organisations mandate that all external spending should fall within the remit and control of the procurement group.
What precipitated this change? We can only surmise that the likeliest reasons are competitive pressure compelling organisations to reduce costs; legislation requiring the disclosure of risks to shareholders; management’s awareness of procurement’s potential to positively impact the profitability of a given organisation; and the levels of professionalism within procurement groups. Twenty years ago, no more than a handful of universities offered graduate degrees in procurement management; now there are dozens around the world. This trend demonstrates a sustained increase in demand for educational opportunities in the field.
Recently, a new trend has emerged: the procurement group has been dividing and migrating into both strategic and tactical elements. Procurement has begun to play a valuable tactical role, overseeing the day-to-day operations that affect the supply chain, while a newly ascendant aspect of procurement – sourcing – has taken on the longer-range strategic role of finding, qualifying, developing, and contracting with domestic and global suppliers. It is important to keep in mind that sourcing is still relatively in its infancy (though we hear so much about it), and the process is likely to continue evolving substantially over the coming decade.
GoSourcing will leave the future to visionaries. Instead, we will address – through articles, videos, webinars and case studies – what we believe is the state-of-the-art of strategic sourcing today, providing the procurement professional with a basis for understanding sourcing practices and tools as they exist now, while also supplying him or her with the information needed to comprehend the future evolution of sourcing.
What precipitated this change? We can only surmise that the likeliest reasons are competitive pressure compelling organisations to reduce costs; legislation requiring the disclosure of risks to shareholders; management’s awareness of procurement’s potential to positively impact the profitability of a given organisation; and the levels of professionalism within procurement groups. Twenty years ago, no more than a handful of universities offered graduate degrees in procurement management; now there are dozens around the world. This trend demonstrates a sustained increase in demand for educational opportunities in the field.
Recently, a new trend has emerged: the procurement group has been dividing and migrating into both strategic and tactical elements. Procurement has begun to play a valuable tactical role, overseeing the day-to-day operations that affect the supply chain, while a newly ascendant aspect of procurement – sourcing – has taken on the longer-range strategic role of finding, qualifying, developing, and contracting with domestic and global suppliers. It is important to keep in mind that sourcing is still relatively in its infancy (though we hear so much about it), and the process is likely to continue evolving substantially over the coming decade.
GoSourcing will leave the future to visionaries. Instead, we will address – through articles, videos, webinars and case studies – what we believe is the state-of-the-art of strategic sourcing today, providing the procurement professional with a basis for understanding sourcing practices and tools as they exist now, while also supplying him or her with the information needed to comprehend the future evolution of sourcing.
