Building a world-class global procurement organization

Building a world-class global procurement organization

by 3q, October 8, 2014

The $20 billion industrial company was big and far-reaching—a global market leader with a presence in more than 60 countries and aggressive financial targets. To reach those targets, top management turned to procurement to generate savings. But when executives took stock of the existing procurement organization and capabilities, the massive challenge they faced came into sharp and discouraging focus.

What was wrong? The procurement organization struggled with factors that were largely out of its control. The company’s nearly 700 procurement employees functioned in strong but separate kingdoms across countries. They worked toward different objectives and had a poor track record for succeeding in global projects. Among the many issues: The global procurement function had less power than it needed, operated without a clear mandate and struggled to convince countries to participate in a coordinated global effort. The rare times when people did work together, the collaboration was ineffective. Coming to terms with this misalignment, missing skills and inadequate capabilities meant one thing: Global procurement was likely to disappoint.

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