The 21st Century Procurement Department

PurchTips - Edition # 80 July 26, 2005

By Charles Dominick, C.P.M., SPSM

What Is A 21st Century Procurement Department?

A recently certified SPSM had been asked to do a presentation on characteristics of "The 21st Century Procurement Department." He asked me for input on a few key areas and I'll share that input with you...

Structure & Alignment - Modern procurement departments structure themselves to achieve the perfect mix of centralized and decentralized buying. End users - not procurement - place orders for low-dollar items, using contracts set up by a centralized procurement staff. So transactions are decentralized, not decisions.

A centralized procurement staff is concerned not with order placement, but with establishing enterprise-wide contracts, managing relationships with those suppliers, and providing processes for decentralized transactions.

There is no one-size-fits-all way of aligning a procurement department. Some organizations align their procurement staff according to customer. Others align according to commodity. Still others align by supplier. The "best" way depends of the goals of the company.

Qualifications, Knowledge, & Skills - Because of the higher-level responsibilities of modern purchasers, they must have solid fundamental procurement capabilities, analytical skills (particularly in financial analysis), advanced computer expertise, and skills in contracts, project management, relationship building, strategy development, and negotiation.

The manager needs to have all of the skills of his/her employees plus the ability to:

• Align the procurement department with the mission and vision of the overall organization
• Implement initiatives and best practices that support the mission and vision of the overall organization
• Lead people and the procurement function in general

Software & Intangibles - Modern organizations are adopting or "growing into" spend management.

technology solutions which blend eProcurement, reverse auction, spend analysis, and other capabilities. As far as intangibles, they focus on delivering measurable results aligned with organizational objectives and collaborating with suppliers to achieve a competitive advantage.

In addition, procurement departments are enlarging their role in the supply chain. Once simply just the interface for external "inputs," procurement departments are now also expanding towards the organization's "outputs." This involves managing inventory, taking responsibility for logistics, and, in the future, even being a more significant part of a customer collaboration team.

Spotlight On Professional Development Opportunities

Are you tired of not getting enough opportunities, respect, and money out of your purchasing career? Well, guess what? Nothing will change unless you take action towards becoming a world-class supply manager.

The SPSM Certification Program is an action plan for achieving success in your career. Read more at:

www.NextLevelPurchasing.com

Purchasing News

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Since the last edition of PurchTips, at least 2 new jobs preferring the SPSM Certification have been posted at www.NextLevelPurchasing.com/jobs

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