Welcome to another installment of Whitepaper Wednesday on the Purchasing Certification Blog. Today’s installment will focus on a whitepaper from SAP called “Enabling Profitable Growth Through Procurement: Transforming The Sourcing & Procurement Organization.”

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At first, I didn’t think I was going to be able to extract much noteworthy from this whitepaper. It started with the typical high-level, fundamental stuff about procurement contributing to competitive advantage and how much harder it is to get Sales to contribute the same degree of profit impact as Procurement.

But, just as I was going to give up on the paper, it talked about four “best practices that leading organizations implement” to “manage total costs and negotiate better contracts.” Three of those best practices were not surprising. The other was one that is not commonly mentioned but, as I discussed in my recent podcast with Supply & Demand Chain Executive, very important and underrated – “Focus on Employees.” Before I share some quotes about that best practice, I’ll list all four from the whitepaper:

  • Align the sourcing and procurement organizational model to meet business needs
  • Manage spend and suppliers strategically
  • Focus on employees
  • Implement cutting-edge technology

Here’s an excerpt that I found particularly interesting:

“After acquiring the right people, top-performing organizations train and nurture their employees, offering educational and certificate programs to enhance their skills…almost 62% of sourcing and procurement employees [in leading organizations] had formal training in negotiations, compared to 45% for other companies.”

Sixty-two percent seems a bit low. That means that over 1/3 of the people negotiating procurement contracts aren’t even trained!

I could rant on that for days, but let me get back to the whitepaper…

I’m very happy to see that I am not the only one out there shouting the mantra that “people matter for procurement success!” I was actually a little surprised that a software company wrote this too as most software providers present their solutions as the panacea for all procurement ills.

The whitepaper continued on with some interesting research results, including “the average company has centralized about 69% of its sourcing and procurement functions” (hopefully that doesn’t mean PO cutting) and “the study found that companies implementing a category-aligned organizational approach were more efficient in terms of full-time equivalents per billion in spend.”

You can download the whitepaper here.

To Your Career,
Charles Dominick, SPSM
President & Chief Procurement Officer
Next Level Purchasing, Inc.
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Charles Dominick, SPSM, SPSM2, SPSM3

Charles Dominick, SPSM, SPSM2, SPSM3 is an internationally-recognized business expert, legendary procurement thought leader, award-winning entrepreneur, and provocative blogger. Charles founded the Next Level Purchasing Association in 2000, oversaw its incredible growth, and successfully led the organization to its acquisition by the Certitrek Group in 2016. He continues to blog and provide advisory services for the NLPA on a part-time basis as he incubates his upcoming business innovations. Charles is also the co-author of the wildly popular, groundbreaking book, "The Procurement Game Plan: Winning Strategies & Techniques For Supply Management Professionals."

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