Why Private Equity needs a New Purpose for Procurement

We know a better way of doing procurement. Procurement with a purpose

The purpose of Private Equity is value creation in portfolio companies, and with half of all business value originating in the external part of the value chain, smart PE firms have always leveraged procurement excellence as a way to lower costs and drive value. 

However, as valuation is more than just EBITDA, procurement is more than just cost savings. 

Driving procurement excellence forward through our work with some of the world’s leading procurement organisations, insights from our network of CPOs, and with research from our partnership with The Procurement Initiative, it is clear that there is an urgent need for a New Purpose for Procurement.

In the future, the growing importance of procurement as a value creation lever requires far reaching changes.  

Negotiating and managing costs are no longer enough. Procurement organizations need to actively shape their environment, search for innovation and implement digital solutions.  

Suppliers need to become partners in order to meet both resilience, and sustainability related challenges. Cost awareness is complemented by value generation.  

The New Purpose of Procurement focuses on Supply Chain Resilience, Sustainability and Value Creation. All must be underpinned by the three foundations of digitalization, collaboration and people and leadership.