To over simplify the role of a Procurement Director you would probably describe it as someone who specifies, identifies, sources and then agrees on the supply of goods or services. Taking into consideration obtaining those goods or services within a specific time and at the right price is rather a simple explanation within a complex context. So, let’s take it to higher ground shall we? Imagine a category of $400m supply of coffee, a noted key commodity that can be at times volatile, although it has a strong consumer demand and required by varying sources of supply – a simple exercise in Demand & Supply, economics one-on-one. However, as a Procurement Director with a strong team of category specialists across a range of good and services how would a volatile supply on commodities or say specialised technical equipment vital for say, human life support or a medical device be approached? Not so easy one would gather – even with well researched, well supported with contract lawyers, well advanced technical support to assist a range of key factors on consistent supply. Overall one would perhaps call this governance and compliance, generally a routine process perhaps. Let’s now take into account a product such as wheat! – It has broad multiple products and may be susceptible to climate changes like drought. Maybe you were lucky and bought your supply before the drought – a price increase that you managed to escape.  

Or perhaps you have taken the risk, bought short on 2 months’ supply, draught has set in, crops are short by 18% on forecast, price per tonne is now up 24% on forecast and you got no chance of pulling down on cost or sourcing supply elsewhere – wow the joys of Procurement!

Honest admission here ok! – for many years I believed this must have been one of the easiest jobs on the planet – you’re sitting on one side of the desk cash in the pocket so to speak – sales on the other side of the desk attempting all sorts of methods to secure the deal.

Since then I have however realised and learned whether we are talking commodities or special one off items – either way, the risk is enormous if you get it wrong –  the process does require many minds, many hands, tight governance and compliance to get it right.

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Stephen Ibbotson
Talent Focus,
Director of Executive Search ANZ and Asia Pacific
Tel : + 61 2 9421 5900.