Procurement’s Convergence Fever

This decade, business has been gripped by a convergence fever, combining more business units, organizations, and products in response to increasing competition and the market demand for new, more differentiated, and innovative products and services. Within the enterprise, business processes and functions are converging around value and shared interests just as some business partners are along supply chain lines. One example of this corporate convergence is the Chief Procurement Officer (CPO), a role that many executives now view as they may a smart phone or Swiss army knife: a multi-functional device (or leader) that can adeptly support many key activities. Business leader, sourcing expert, trusted advisor, relationship manager, supply  manager, cash manager, risk manager, and many other roles are converging under the leadership of the CPO.

So, what disciplines have converged under the CPO in the past five years?  It should come as no surprise that supplier and spend areas rank highest on the list. Supply risk, after all, is frequently, if not generally, viewed as a traditional “procurement process;” nonetheless, it is a newer responsibility for a majority (59%) of procurement teams. In the case of both travel management (52%) and contingent workforce management (32%), these categories of spend are being actively managed by procurement, which is not only performing the sourcing work to get them under contract, but also managing the categories, and setting policies and administering the overall programs. The growing use of business process outsourcing by enterprises is mirrored by procurement’s growing involvement with outsourcing (27%); establishing and managing outsourcing governance programs, establishing SLAs, and selecting and managing providers will continue to be a huge opportunity for procurement to centralize the management of this complex business area.

For some procurement groups, convergence has come in the form of new, complex categories to manage like travel, contingent workforce, BPO, and meetings while others have taken over wholesale business functions such as accounts payable and facilities management. Others see convergence in those areas often closely associated with sourcing and suppliers – supply risk, new product development, and cash management. Whether by design or necessity, the responsibilities of the procurement department in 2014 and beyond continue to grow and sometimes shift, with it comes the opportunity to make a larger impact.

With procurement’s convergence fever running high, we will feature a series of articles on CPO Rising that will examine how Best-in-Class CPOs and their teams are expanding into key areas like supply risk management, contingent workforce management, outsourcing management, and cash management. We’ll also look at why this expansion of responsibilities is occurring so often. So stay tuned….

RELATED ARTICLES

Chief Procurement Officers in 2014: Procurement’s Convergence with Business Travel

CPO Rising 2014: Convergence – Spheres of Influence

Ardent Partners Publishes Annual State of Procurement Report

Procurement’s Evolution (Part IV): Convergence with Contingent Workforce Management

Procurement’s Evolution (Part III): Convergence With Marketing

Procurement’s Evolution (Part II): Convergence with Travel

Procurement’s Evolution (Part I): Convergence with Finance