Procurement and Finance pretty much ignore each other so far, with a minimum level of communication between both. It needs to change to respond to challenges created by the financial and economic crisis.

Changes should materialise through a 2-way relationship:

  • Procurement taking heed of Financial objectives beyond the reduction of Cost Of Goods Sold, i.e. primarily working towards the Working Capital reduction

  • Finance paying more interest to Procurement activity, e.g. at budget setting, and also allowing Procurement to add value in the sourcing of Financial Services, i.e. Insurances but also Banking services

We will develop such a rich topic through a mini-series of 3 articles, starting with a proposition as to how Procurement can take Finance objectives on board beyond savings and value for money; we will then, in the following article, deal with the middle ground issue of savings and budget management, before completing the series with an article on how Finance can support Procurement to allow them to deliver more value to the business.

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