by Jan Malasek | May 10, 2023 | Procurement Operations, Strategic Sourcing, Uncategorized
By Steve Miller – https://www.linkedin.com/in/stevemiller-coo/ Mike Nolan of SourceSuite.com noted that “the first traces of procurement can be seen throughout ancient history, including the Egyptians in 3,000 BC.”1 Jose Ignacio Lopez de Arriortua made a company’s lead procurement role both famous and infamous over 30 years ago by first helping GM to “save billions of dollars” and then being “charged [by GM] that he had absconded with 20 boxes of top-secret documents.”2 Is it surprising, then, that after thousands of years of practice and 30+ years of high visibility that most CEOs and CFOs up until 2020 believed their procurement functions were either world class, or at least adequate, for the business challenges they might face? These executives learned from 2020 to 2023 what many top procurement experts already knew: you can find stars and strategic executives in procurement, but overall, it is a function very early in its transformation toward functional excellence. Most business executives don’t understand what excellent procurement looks like. As an example, a Fortune 100 CEO in 2019 said this about the value of having a head of procurement: “if we can buy things like pencils for a cheaper price, then why not?” It probably is not a surprise that in 2020 this company saw its direct operating and SG&A costs increase over $400 million, almost all of which dropped to the bottom line in terms of reduced operating income. Kearney’s 2022 Assessment of Excellence in Procurement study found that leaders, compared with their industry peers, generate nearly 2x more total shareholder return, rebounded 3x stronger through COVID, and contributed 200 basis points more to...
