Added by ariba, 31 weeks ago

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1 - The Rising Procurement Tide
Procurement organizations have evolved dramatically in the last few years, gaining new levels of
influence and support across companies. Until recently, many executives considered procurement a
tactical, transaction-based support function. But just as quickly as CFOs and CEOs could shout "profit
warning" or "reduced top-line growth" in the recent economic downturn, procurement became truly
strategic, moving to a prominent spot at the executive level of organizations and affecting the way
companies think about margin improvement and bottom line results.
Procurement's success at identifying and realizing savings has helped it gain influence and trust within
companies. During its rise to eminence in recent years, procurement–which managers once saw as a
back-office assignment–catapulted its way to the vanguard of the organization, imparting significant
influence to its leaders. And for the first time, executives began to take considerable interest in the
activities and potential that procurement could bring to the company.
In addition to generating savings, three larger trends turned the corporate eye towards procurement in
the past few years. The first, internet connectivity, provided companies with a new medium to identify,
negotiate, and engage suppliers and partners on an ongoing basis. Second, the introduction of new
tools and technologies empowered organizations with visibility and transparency into specific business
issues for the first time (e.g. tools to gain visibility into spending habits and to address maverick
purchases). And third, the rapid introduction of global markets as sources of supply, manufacture,
services, and demand continued to elevate executive interest in procurement. Taken together, these
trends helped executives to think not only about the opportunity to reduce costs, but how to create new
forms of value inside and outside the organization through more responsive supplier relationships, faster
organizational decision making, and more efficient processes.

Questions or feedback? email jfogarty@ariba.com