Why Finance is Failing Procurement

Today’s guest post is from Pierre Mitchell, the maverick of Spend Matters, who needs no introduction.

I’m doing a 5-7 minute poll (here) on Procurement-Finance misalignment (in conjunction with ISM).

This poll is basically geared around the question below regarding what Finance needs to do differently.

The long version takes about 15-20 minutes, but gets you entered to win an Apple Watch or one of 10 Spend Matters PRO monthly subscriptions.

I’m presenting provisional results at next week’s ISM Conference, and I’m going to take a snapshot of the data this Friday and need some good provisional data to present!

So, if you are a practitioner (and I apologize for not reaching out 1-to-1) I would like to personally appeal to you to take the 5-7 minutes required to help the profession build this case for change.

If you are a provider, I would greatly appreciate if you could pass this on to any of your practitioner contacts this week.

The study link that you can forward is here: http://bit.ly/ProcurementFinanceAlignment2015.


And here’s the question in question …

How can Finance reduce misalignment with Procurement and unlock impactful value for your firm?

Please choose all that apply that would have a favorable and meaningful impact on your performance.

These items would have a favorable and meaningful impact:

  1. Don’t reduce working capital at the expense of supplier health and TCO
  2. Look beyond headcount reductions for project justifications
  3. Provide more resources to get spending, contract, and savings visibility in place (for mutual benefit)
  4. Include Procurement in upstream strategy & planning activities (M&A, JVs, Innovation, Tax Efficiency, Variabilization, etc.)
  5. Fix the “use-it-or-lose-it” budgeting process that encourages end-of-period spending
  6. Establish a more effective procurement involvement/approval policy and process
  7. Be an advocate, enabler, and leader for strategic cost management processes/ practices
  8. Help manage external expenditures with the same rigor that is applied to internal expenditures
  9. Provide Internal Auditors and Controllers as change agents to help Procurement
  10. Treat procurement as a true partner and a profit center rather than just another cost center
  11. Don’t try to use the General Ledger as a spend data warehouse
  12. Move A/P from a payment efficiency focus to a spend management effectiveness focus
  13. Measure Procurement on value beyond purchase cost reductions (especially PPV)
  14. Help get Legal involved appropriately in the contracting process as an enabler and partner
  15. Help coordinate and prioritize corporate risk/compliance activities that should be taken out to the supply base coherently
  16. Get a supplier master data management process and policy that works for everyone
  17. Invest in needed supply risk management capabilities to help protect the business