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Procurement: The intermediary growing in relevance

The internet has made it easy for everyone to go direct to the source of whatever they need. But procurement’s relevance as an intermediary isn’t going down.

For decades, procurement teams have been connecting people across their organisations with suppliers capable of delivering what those people need, when they need it, at the right price. And for a very long time, that was enough to see the department deliver strong, consistent value to the business.

But with the rise of the internet and ecommerce came new abilities and total empowerment for individuals. The veil was lifted on suppliers, and consumers and employees gained the power to source what they need direct from global suppliers.

It looked like the end of an era for the procurement function. And to a certain extent, it was. With direct buying options available to everyone, issues like maverick buying have rocketed, creating challenges for procurement teams to navigate.

But despite this newfound power now resting in the hands of business teams for many years, procurement’s relevance hasn’t declined — far from it in fact.

Just when it looked like the days of intermediaries were numbered, procurement teams leaned into their role as connectors across multiple departments, and used their unique position in the business to drive more value and become more strategically relevant than ever before.

A new kind of intermediary

The procurement department of today is still an intermediary, just not as we knew it before. Sourcing the resources that teams need to succeed still makes up a huge part of what procurement teams do. But today, leading procurement teams are assuming a new role as a strategic intermediary between product, sales, finance, and supply chain teams.

Procurement is the only function that works closely with all of those teams, making it uniquely positioned to drive value across them. As each department becomes more data-driven in its operations and operationalises data in new ways, procurement teams are exposed to those insights and can use them in their engagements with other teams.

The result is a whole new kind of intermediary – one that translates insights from silos into wider business actions as part of its day-to-day activities. It’s still the procurement team we always knew, but it’s also a powerful driver of strategic value through this new role.

Adding unique value to aggregated insights

Like any good intermediary, these leading procurement teams don’t just take insights and value from one point and move them to another. When insights are gathered from product, sales, finance, and supply chain teams, procurement teams add their own insights to the mix, providing value-adding context.

Often, it’s this context that ties all those diverse insights together and helps translate them into clear actions that can meet the need of multiple teams at once.

The best way to illustrate this is by walking through a quick example. The situation starts with four siloed insights, held within individual departments, each lacking the wider context needed to bring them to the attention of the business at large:

  • In sales, teams have noticed an increase in customer objections based on the sustainability of materials used in product packaging.
  • In the supply chain, logistics operators are concerned about emerging restrictions that may limit the use of certain non-sustainable packaging.
  • In finance, a gradual decline in revenue can be seen across long-standing product lines, indicating the possible need for a refresh.
  • In product development, teams are actively seeking opportunities to incorporate new materials into existing products, to reduce waste.

Each of those departments is capable of actioning those points on their own. But, through close collaboration with them all, the procurement team is uniquely positioned to see the clear line that runs between.

Once you add the procurement team’s insight into the mix – that its category intelligence efforts have identified an opportunity to source a new kind of recyclable packaging at a low cost – five distinct trends can be seamlessly translated into a single strategic business action.

Why it’s time for an intermediary to have a seat at the strategic table

The word intermediary doesn’t scream strategic value. But by using their position at the nexus of multiple lines of business, procurement teams have become exactly that – a highly relevant intermediary, capable of delivering strong strategic value.

Now more than ever, it’s crucial that the procurement department is given a seat at the strategic table, so that its aggregated and contextualised insights can be translated into strategic product, pricing, and promotion decisions that deliver measurable value.

To find out more about how The Smart Cube is enabling procurement teams to take up this strategic role, and empowering them with the category and market intelligence needed to contextualise intelligence gathered from across the business, download our new eBook.

Inside, you’ll discover our unique approach to procurement intelligence and empowerment, and find out how we combine human and artificial intelligence to deliver the best results for procurement teams and their organisations.

  • Omer Abdullah

    Omer is a co-founder of The Smart Cube and leads the firm’s business across The Americas. He works with Procurement and Strategy leaders at global organisations, transforming their teams to become value-driven and insight-led. Omer has more than 30 years of management consulting, global corporate and industry experience across North America, Europe and Asia. His prior roles include A.T. Kearney (North America), Warner Lambert (USA) and The Perrier Group (Asia-Pacific). Omer has an MBA from the University of Michigan at Ann Arbor, USA, and a BBA from the University of East Asia.

  • Omer Abdullah

    Omer is a co-founder of The Smart Cube and leads the firm’s business across The Americas. He works with Procurement and Strategy leaders at global organisations, transforming their teams to become value-driven and insight-led. Omer has more than 30 years of management consulting, global corporate and industry experience across North America, Europe and Asia. His prior roles include A.T. Kearney (North America), Warner Lambert (USA) and The Perrier Group (Asia-Pacific). Omer has an MBA from the University of Michigan at Ann Arbor, USA, and a BBA from the University of East Asia.