Procurement is not just about savings (and the cost avoidance that the C-Suite continually demands but refuses to recognize during the performance reviews). Nor is it just about supply assurance, which is most definitely critical in direct industries. It’s not even about risk management, even though that’s a big part, because the organization likely has a role dedicated to that.

It’s about value generation. While corporate and the other departments like to propagate the myth, Procurement is not a cost-center! With the exception of headcount and supporting software, it’s not spending it’s own money, it’s helping the other departments and budget holders spend their money more wisely in a manner that generates additional value, whatever that value may be. Sometimes it’s lower cost, sometimes it’s higher quality, sometimes it’s lower risk, sometimes it’s higher service.

This will require a lot more than just standing up and refusing to endorse a large contract that did not go through a proper selection process and/or was not properly vetted. (Emphasis on large. If the contract is small, and does not require procurement vetting [which will often be the case in Marketing, Legal, etc.], it’s probably not even worth the cost of review. But if a department wants to hand out a multi-million dollar contract with no bid and no vetting, BIG RED FLAG!)

A big thank you to Tom Mills for reminding us of this in his recent post on how Procurement’s job is not to smile and nod, which reminded me of a post by THE REVELATOR Jon Hansen about a year ago on How It’s Procurement’s Job To Speak The Unthinkable (which he credits to Tom for inspiring him in something Tom wrote about a year ago).

Because Procurement has to stand up to decisions that will have a significant negative impact on the organization, such as

• outsourcing critical functions (with no mechanism to capture knowledge and bring the function back when a temporary crisis has been averted),
• changing providers due to temporary geopolitical conditions without proper long-term planning, and/or
• attempting to replace employees with AI (vs. augment them for maximum performance).

While we can say that all of this will make you EXCEEDINGLY UNPOPULAR with the CXO who is pushing for this (even more so than just telling the CEO to essentially f*ck 0ff, which, I can tell you from personal experience, they really don’t like to hear), you have to do it because, as we all know, none of the I-can-manage-off-a-spreadsheeet MBAs or @ss-k1ss3rs will! But all of this is absolutely vital to organizational success and the value Procurement can bring because no one understands better

• the cost of lost knowledge,
• the full impact of a rush decision to change suppliers and all of the organizational and supply-chain wide fallout that will occur for months (and maybe years) to come, and
• the true value of a knowledgeable employee (vs. the true cost of a bad decision left to AI)

than Procurement. Procurement is about identifying, realizing, and protecting value. And if Procurement pros don’t speak up when they need to, then value will be lost. After all, it’s not like you can’t be very polite when doing it (unless the project leader keeps cutting you off, in which case you have another problem to speak up about).