The Head of Procurement delegates and coordinates purchasing and procurement logistics in the company. Senior project managers or team leads report to him, the C-level (CEO, COO) stands above. In this respect, they work across departments. Procurement managers negotiate framework conditions with suppliers and support the calculation of customer offers. In their function, they manage the entire procurement department.
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As the function of Heads of Procurement is cross-divisional, they are responsible for requesting quotations from suppliers, issuing invoices and calculating costs. In other words, they are involved in the operational business.
In the same way, they have to work strategically with a view to the management level. They have to keep an eye on the Total Cost of Ownership (TCO) and permanently optimise it. Utilizing the TCO accounting method, it is possible to determine not only direct costs in purchasing, but also indirect costs in consumption.
Furthermore, a Head of Procurement points out deviations from the plan, checks costing specifications and is in contact with management. This position is also a link between sales and marketing. The cooperation with other employees in the company is facilitated and shortened by digitalisation.
The digital transformation creates faster and cheaper ways of working. E-procurement systems support this work, mastered by a Head of Procurement. With digital procurement, purchasing processes become more efficient and cost-effective. Among other things, purchases and invoices can be ordered and issued at specific delivery times.
If the experience is available in using control systems that automation solutions offer, a lot has already been done. The advanced form, which not only reproduces procurement and solution processes, is Business Intelligence (BI). With Business Intelligence, these processes are predicted and prioritised.
Nevertheless, the head of procurement is required to hold all the strings in one hand. Or at least to know and use the possibilities of digitalisation.
The most important areas of application include:
The interconnectedness of supply chains is certainly a blessing of globalisation. As is still noticeable today, a global crisis like Covid-19 is also a curse at the same time. Supply chains have become a nightmare for many companies as of 2020 with the advent of the pandemic.
There are different types of supply chain analysis. There are cognitive, descriptive and predictive analysis. In short, it is about identifying bottlenecks and faulty processes (cognitive), enabling necessary action steps (predictive) and establishing the best possible relationships with both customers and suppliers. This ranges from offers from suppliers to the requests of customers.
Once these analyses are intelligently interpreted and fed back into an analysis, future problems such as pandemics could be much better managed. Since the amount of data that accumulates during the collection of the analyses is too much for human beings, artificial intelligence (AI) comes to the rescue.
The information obtained from supply chain analytics creates a statistical optimum between the supply that is being purchased and the demand that—with a high degree of probability—will be there in the future. As this relation is related to multiple factors, well-experienced procurement managers will be able to help in this area. Artificial intelligence is more likely to reach the statistical optimum mentioned above. The interplay between humans and AI for the Head of Procurement position will be the best way to solve future problems.
Risk management, alongside purchasing and procurement strategies, has become an important means for Heads of Procurement. It is the responsibility of leaders of the procurement department to train and develop the competencies of their staff.
Furthermore, purchasing managers delegate the management procurement plan. They qualify suppliers and travel to trade fairs at home and abroad. When selecting suppliers and working with them, their influence extends into the area of product optimisation.
Sustainability and diversity are incorporated into every step of the process, and also ethical criteria can be considered in procurement. Starting from the supplier to the supply chains and product optimisation. Critical issues are the practices of human capital (like child labour), reduction of harmful emissions and excessive consumption of water and energy. Procurement can thus become the company's flagship for diversity and sustainability.
CareerTeam will help you find internationally connected Head of Procurements for Global Strategic Sourcing. Because we are active throughout Europe, our network has grown to over 600,000 contacts. With our multichannel search and modern algorithm, we can also discover potentially “hidden candidates” for your Head of Procurement. You are welcome to contact us.