Article at a glance:

Inventing the 21st-century purchasing organization

• A decade of globalization-fueled competition has opened the eyes of senior managers everywhere to the strategic benefits of purchasing and supply management (PSM). Too often, however, the evolution in the way executives think about purchasing hasn’t translated into results.
• A small number of purchasing groups, however, are achieving sustainable cost reductions in nontraditional areas and using market insights gained alongside suppliers to enhance the activities of their organizations as a whole. Some use purchasing as a springboard for innovation.
• Successful purchasing groups tend to adopt a more rigorous approach to talent, create higher aspirations for themselves, and carefully align their sourcing efforts with the strategic goals of their companies. These pioneering organizations are laying the foundation for a better approach to procurement—one that average performers ignore at their peril.