Legal - Procurement Collaboration: From Tactical to Strategic
Abstract
From clerks using papyrus to record the amount of labour and materials needed for the construction of a pyramid through to Roman scribes creating contracts, allowing the empire to trade with private suppliers – yes, what we associate with today's procurement dates back as early as 3000 BC. Unsurprisingly, it was greatly appreciated during the Industrial Revolution, especially when strategic thinking and negotiation skills were required in offsetting the high manufacturing costs associated with intense manual work. Still valid today? It is and its importance goes far beyond the purchasing of paper clips and water dispensers for today's corporation – in fact, it probably touches in one way or another every single part of the organization that you work in. But why? Good question – if we think of the simple equation where profit equals turnover minus costs and look at the breakdown of costs, it would be easy to spot that after employee remuneration (usually, the highest one) we have the third party spend, which over the past decade had been under great scrutiny. If you walk through any Supply Chain/Procurement/Sourcing floor, you would see the property team trying to enforce flexible working, the technology team doing a tender for a new cloud hosting services provider and moving away from physical data centers and the marketing guys trying to move to a more advanced digital customer communications only. All of the initiatives are just a small example of myriad of activities that Chief Procurement Officers oversee, which in turns allows the CEO and CFO to see a real reduction in cost.
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