Creating an Entrepreneurial Procurement Organization

Khosro Ezaz-Nikpay, Ulrich Horsmann, and Heige Jordan 

A Bold Move in Purchasing can Create Huge Value 

Over the past decade, a number of industries have systematically set out to improve their PSM. For many of them, the focus on PSM has been stimulated by the successes that the automotive industry had previously achieved by optimizing procurement in the 1980s, and by the ripple effect of these successes on upstream industries like systems and components manufacturing, metals, and chemicals. 

A number of companies in the chemical industry were among those which discovered the enormous value that could be created by improving their PSM capabilities, a value typically in the same order of magnitude as a major new product or business. They also discovered, however, that they needed to be continually innovative in their PSM if that value was to grow year after year. New initiatives in the area have spread so fast that techniques like cross-functional teams - a novelty only a short while ago - have now become almost like a commodity, and are no longer sufficient on their own to enable a firm to distinguish itself from the competition. 

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