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The Rise of Procurement

Think of today’s procurement as purchasing on steroids. The stomp story is being repeated throughout the global business community. At one time, this type of procurement behavior was relegated to commoditized manufacturing such as the automobile business. It has now spread to the sales of high-value medical devices and professional services. Buyers are taking control and driving down prices using every tactic in their well-developed playbook until they are successful in meeting their cost-cutting goals and earning a place at the executive table. This state of affairs is the new normal.

Profits are draining from businesses and companies are actually going out of business because they don’t know how to deal with the procurement-price buzz saw. One specialty electronics manufacturer created a huge amount of value for its end-use customer, the U.S. Navy. This manufacturer got so beat up by procurement that it couldn’t afford to stay in business. Ironically, the Navy discovered, too late, that the company’s technology had dramatically improved the performance of the F-18 Hornet jet aircraft.

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