Executive Briefings

Most Companies Could Use Procurement Transformation

An effective procurement process begins with having all spend under control, including money spent on logistics and transportation, says Nick Seiersen, president and CEO of Seiersen Enterprise. Overall, such a process should ensure that the right suppliers provide the right products or services on the right terms, he says.

One key sign that a company needs to work on its procurement activities is suppliers who are under-performing, "either because they are not being managed or because they were forced into such a lousy deal that they are trying to scratch their way back to profitability," Seiersen says. "Either way, this represents a strategy that is not going to work for the company long term."

Just about every company has room for improvement in procurement management, says Seiersen. "Most need to bring more spend under control and, generally, the relationship between the procurement team and the business teams needs work," he says. A common problem in this relationship is that the procurement team comes to the table, or is perceived as coming to the table, as an enforcer of rules. "That is the wrong story to bring," Seiersen says. "The procurement people need to make it clear that they are there to help the business get the right deal with the right suppliers on the right terms. The rules and policies around procurement are just part of how they do that - the real discussion should be about what the business needs."

When a company has the right deals with the right suppliers on the right terms, the suppliers are happy to be the company's provider of choice and they are happy to do what they have committed to do," he says. "You have a deal that works for them and for you, and you both are better off as a consequence of working together," he says.

To view video in its entirely, click here


Keywords: transportation management, supply chain management, logistics IT solutions, logistics management, supply chain solutions, managing the procurement function

One key sign that a company needs to work on its procurement activities is suppliers who are under-performing, "either because they are not being managed or because they were forced into such a lousy deal that they are trying to scratch their way back to profitability," Seiersen says. "Either way, this represents a strategy that is not going to work for the company long term."

Just about every company has room for improvement in procurement management, says Seiersen. "Most need to bring more spend under control and, generally, the relationship between the procurement team and the business teams needs work," he says. A common problem in this relationship is that the procurement team comes to the table, or is perceived as coming to the table, as an enforcer of rules. "That is the wrong story to bring," Seiersen says. "The procurement people need to make it clear that they are there to help the business get the right deal with the right suppliers on the right terms. The rules and policies around procurement are just part of how they do that - the real discussion should be about what the business needs."

When a company has the right deals with the right suppliers on the right terms, the suppliers are happy to be the company's provider of choice and they are happy to do what they have committed to do," he says. "You have a deal that works for them and for you, and you both are better off as a consequence of working together," he says.

To view video in its entirely, click here


Keywords: transportation management, supply chain management, logistics IT solutions, logistics management, supply chain solutions, managing the procurement function