This week we’ve got another informal chat from The Procuretech Pub livestreams. I’m talking to Dr. Wolfgang Schnellbächer from BCG, the author of a new book fresh off the presses - Profit from the Source: Transforming Your Business by Putting Suppliers at the Core. 
Supplier-centric transformation and the future of procurement
I ask Wolfgang for a quick bit of background, before we move on to talking about his book.

He explains that he is currently leading procurement for BCG across Europe, the Middle East, Africa, and South America. He focuses on procurement transformations across different industries, including automotive.

In particular, Wolfgang says that he enjoys expanding the mandate for procurement for wider value generation, using technology.

I ask Wolfgang about common mistakes in how organisations manage their procurement teams internally.


He says that, interestingly enough, many of the biggest companies make the biggest mistakes - 50, 60, perhaps even 70 percent of a company’s overall budget is managed through suppliers by procurement. Oftentimes it goes even higher. If you look at how much time CEOs spend thinking about suppliers or procurement, you’d be surprised: 1% of their day, which is around seven minutes. There is not enough focus on procurement, when there’s such big potential in terms of overall spend numbers. 
Sales or sourcing? Why businesses need to shift their focus
I ask Wolfgang why procurement doesn’t get the same level of attention as sales.

He thinks that this goes overlooked because most CEOs come from a sales background. It’s a legacy issue that has to change.

Look at Apple - Tim Cook, Apple’s CEO was a CPO before that. He’s always thinking in terms of profit from the source, and it’s paid off for them.

I go on to ask Wolfgang if this means we need to get CEOs on board, so that organisations can view procurement differently. Or is it more simple, that procurement just needs a bigger training budget?

Wolfgang thinks it’ll need a structural mandate to empower procurement. As an example, he asks us to imagine an engineering company: It may have relatively few engineers in-house, but imagine every engineer in that company’s supply chain, all the way down the tiers… It’s a huge number of people that could be coming up with great ideas for that company. It’s frustrating that procurement always gets so little time and money spent on it, so late in the process. 

He also agrees with my second point on training - we need to train people better. It all comes down to experience and expertise. If you have people working in steel procurement, they should have worked in a steel plant. Industry experience really matters. 
Category specific experience - why procurement deserves experts
CPOs often move their procurement professionals around, presumably thinking that it’ll broaden their experience and expose them to more categories. But I put it to Wolfgang that he’s almost saying the opposite - procurement experience only has so much value, and it’s category-specific experience that really counts. 

He says that procurement people should have technical expertise in what they’re...