Insight

The procurement organization, unleashed

March 2018
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Most procurement organizations are focused primarily on tactical sourcing, often limiting their work to negotiating, contracting, and buying. They don’t usually analyze markets, work directly with business owners on specifications, or conduct rigorous supplier performance management. Becoming a strategic sourcing function with an active Chief Procurement Officer changes all that. By upping skill levels beyond tactical purchasing, a strategic procurement function can help achieve corporate goals and gain influence.

 At a glance

  • Good tactical sourcing can save from 5 to 8% on a single transaction through rate reduction. But a strategic procurement function can trim costs by as much as 12 to 21% (figure 1).
  • Irrespective of where your procurement function stands today, there are several steps it can take immediately to move forward and become a strategic sourcing function.

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