Remko van Hoek

AUGUST 02, 2013

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Back in 1983, in a Harvard Business Review article, Peter Kralijc called for the procurement
function to take on a larger and more strategic role in managing the supply chain. Thirty
years on, sales people in most large companies are still being trained in ways to actually
bypass procurement folks in their customer companies. This is not evidence of people taking
the function seriously. What went wrong?
To find out, we conducted a survey with close to 200 procurement executives, in Asia and in
Europe. We found pretty conclusively that procurement managers are their own worst enemy,
both with external suppliers and within the company, with internal customers and other
stakeholders.
Lets begin with supplier relationships. Nearly half our respondents claim they spend time
with suppliers asking them for updates on the markets and new business suggestions. This is
not great, perhaps, but it certainly sounds encouraging.
Poke a little deeper, though, and youll find the picture looks less rosy. As the chart below
shows, only about a third of managers are actually bringing any supplier intelligence into
their organizations by advocating for suppliers and facilitating new connections for them,
which is what you would expect someone managing the supply chain to do. Just 20% claim
to be communicating business insights shared by those customers; only 17% could even tell
us in what segment their supplier put their company. No wonder suppliers dont want to
spend time with these folks.

Lets turn to whats going on inside the company. As the second graphic shows, many
procurement managers are trying to demonstrate internally that they have strategic value.
Theyre gathering intelligence systematically about the companys stakeholders and
communicating their successes. But it isnt getting much further than that. Less than 30% of
the time do we see procurement managers customizing value propositions for internal
customers and stakeholders, tracking satisfaction levels and setting targets for satisfaction.
If this sample is representative, then we can hardly be surprised if many c-suiters think that
procurement is a backwater. And we can hardly expect young high-flyers in most industries
to see it as a career path of choice.
Looking ahead, procurement managers will have to change the way they approach suppliers
and business peers; being a strategic business partner means so much more than negotiating a
discount.

Remko van Hoek is the Global Procurement Director at PricewaterhouseCoopers and is based
in the Netherlands