What came first? The controller or the buyer? It’s really a type of chicken and egg question. Without those engaged in procurement (or materials, labor, finished goods, etc.) there would be nothing to sell – for the vast majority of companies – and no books to close. But, of course, without a controller – or a CFO – setting controls and defining budgeting, it would be all but impossible to buy anything, lest the spending be truly off the reservation to start with.
Perhaps the more pragmatic and less philosophical question to ask is: What is finance’s role related to influencing procurement? The provisional results of a Spend Matters/Institute for Supply Management snap poll based on a qualified sample size of 98 participants suggest that the top role is “validating/auditing performance results against financials (e.g., cost savings)” with 57% of respondents ticking the box on this point. The second most frequently responded to role was “working with procurement as a partner to help the spend owners,” with 53% of respondents citing this. Policy setting (i.e., input to policy around supply/spend) came in next at 48%.
And the numbers drop off from there. Granted, while the results are provisional – we’ll be sharing the final analysis with our PRO subscribers in more detail in the coming months – here are a few things to point out:
- Procurement would appear more of a “nanny” than brother/sister (or parent) from a role perspective; greater oversight and true collaboration is needed!
- There’s a disconnect between actual cost and expenditure that is lost between procurement activity and finance oversight
- Finance has tremendous potential to be a true ally to procurement (as shown by the second and third highest responses), but only serves in this capacity around 50% of the time – even in part.
What am I missing here? Chime in!
(Cross-posted @ Spend Matters)