According to Porter`s Value Chain Analysis, which breaks an organization’s activities into strategically relevant sub-activities, procurement is a support activity. However, during the past decade, procurement as a function won the “fight” for organizational significance, and turned from a back-office support function, to a primary function that is key to remain competitive in today`s ever changing economic environment. Many organizations have realized, that procurement can deliver a unique strategic advantage and value to the company, therefore it needs to be elevated from being an operational process into one that is integrated to the organisation`s strategy.
Traditionally, procurement was a support function, and its sole purpose was to obtain goods and services to fulfil the organisation’s needs. Throughout the years, as Globalisation aroused, and competitors came from everywhere, with different size and accesses to resources to compete for resources, people, customers and supply chains, the need to pay more attention to procurement and supply chain management on a global basis also increased.
Therefore the strategic importance of procurement has significantly increased during the past 10 years, especially for Global and Multinational companies, and several studies show, that it will become of even greater importance in the coming years.   According to A. T. Kearney`s “Assessment of Excellence in Procurement” survey (2011), the procurement strategy needs to be aligned with the Global developments and the local strategic trends to be effective, and its value needs to be measured in order to justify continuous investment.   The survey also outlined that the primary objective for the coming years is reducing the Total Cost of Ownership and focusing on Supplier Relationship management.
Procurement can deliver both tactical and strategic value to an organisation. It can enable an organisation to increase its chances of obtaining value for money (help achieve...