Corporate Purchasing

MRO is still an elusive category in purchasing, says Michael Dennis, Head of Indirect Strategic Sourcing at Schreiber Foods. The biggest challenges for him and his fellow procurement executives remain how to collect and organize data, and how to recruit and keep high-level talent.

Hear him talk about these key issues in corporate purchasing and how Schreiber is addressing them in this exclusive video.

Over the past few years, procurement has become more and more important to a business’s overall success. With competition getting stiffer and stiffer with each passing day, the pressure of keeping costs low is increasing. CPOs have found themselves facing new challenges due to the increased emphasis on corporate purchasing. Given this new environment, CPOs are expected to play a more significant role in the overall functioning of companies in the future. As it is, they are expected to strike a fine balance between decentralized business units’ autonomy and corporate synergy as a whole.

In recent times, several new trends have emerged regarding corporate purchasing. Companies may now be required to alter the administrative structure according to the purchasing as well as corporate coherence. This may involve bringing about changes in leadership and control strategies, administrative and organizational structures, as well as communication and information systems. Recently corporate purchasing has been a hotly debated topic. One of the most prominent trends is that of establishing coordinated purchase structures for contracting direct as well as indirect materials. These corporate agreements are being negotiated with large multinational suppliers, leading to a lowering of costs due to economies of scale. In order to support the standardization of operational purchase processes, several steps are being taken, including increased reliance on electronic purchasing platforms, which would enable the companies to achieve higher levels of spend transparency. It would also allow them to electronically send the purchase orders to the contracted vendors.

Managing and implementing efficient purchase information systems and building international purchase data warehouses are key factors in strategic purchasing. Apart from achieving spend transparency, electronic catalogue & ordering systems as well as e-auction facilities or marketplaces are other aspects which need to be taken care of. The importance of building coherent and effective purchasing communities shouldn’t be underestimated.

CPOs also can’t afford to ignore the human aspects of purchasing. Procurement strategies may involve major changes in how processes, tasks, authorities or responsibilities are divided in an organization. Some issues which involve change may be interpreted or perceived differently by different employees and executives. These changes therefore require a careful approach to change management. CPOs should therefore inquire as to the expectations of various parties involved in the process, in order to avoid any conflicts. Corporate purchasing is a very important aspect of modern corporate governance and should be carefully dealt with. A procurement officer therefore has a lot of responsibility on his or her shoulders in these changing times.