In purchasing there is only one target for a successful business: get what the company needs from an external party at a fair market price. Some CEOs create a huge purchasing dept to reach the above target. This would be true if the people working in the company would profit themselves first instead of the company, if left to do purchasing on their own. This may not even mean corruption alone. It may go as far as being purposefully purchasing with no cost consciousness in mind. Buying for the sake of buying, ie. buying to use up the approved budget and paying for excessively high specifications of quality and service beyond reasonable standards.
Therefore a successful company is not one that staffs itself full of “process policemen/policewomen” but one that finds the balance in providing purchasing specialists but maintains a cost accounting system that ensures that HODs and other custodians of approved budgets are encouraged and rewarded for making sensible use of their budgets when making external purchases. It also makes it transparent if people are paying ridiculous prices for goods and services. In parallel, state-of-the-art IT tools are employed together with strategic outsourcing. A company with a high level of maturity in this regard will gradually move towards “purchasing assurance” instead of “purchasing control” …. and with it, we will see a major structural change in the staffing level of the purchasing department and a transformation of the drivers of good purchasing results within the company. Will the following scenario arise? When we are totally successful in our work to change the culture, there will be no more need for a purchasing department. However, the truth lie in a sweet spot somewhere in the middle.