I believe that procurement and finance should understand to
work together and share information. But, that collaboration is still, in
general, rather superficial and intermittent at most companies. To maximize the
total business impact that can be achieved with procurement and supply
management, the supply management organization cannot work alone. Finance is
often the most important internal “partner” with procurement or supply management
organization.
In our experience, that partnering should involve an active collaboration on such topics as:
(1) managing commodity risks
(2) identifying, assessing and
mitigating supply chain risks
(3) sponsoring and staffing strategic sourcing
teams, often with embedded members from finance
(4) establishing a credible
methodology for calculating and reporting benefits from sourcing initiatives
(5) implementing means to ensure compliance with new contracts and good for
eliminating inefficient and costly “maverick spend
(6) devising ways to adjust
budgets at the cost center level so that sourcing successes have a chance to
make it to the bottom line (and are not automatically spent on other things)
(7) pursuing working capital initiatives, such as improved payment terms,
supplier inventory programs, and “asset recovery” programs.
(8) evaluating
new supply management processes and technology, and building a credible
business case to take supply management to the next level of performance.
In most companies and situations, this approach and form of
engagement do little to align finance and procurement as part of a sustainable
collaboration between both but by collaborating in these two departments can
save lots of efforts and can forecast future risks.
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