The History of Procurement: Past, Present and Future

 The History of Procurement: Past, Present and Future

The History of Procurement: Past, Present and Future

Did you know March is National Procurement Month? According to NIGP, The Institute for Public Purchasing, this month is 'a time to celebrate with pride the role of the public procurement profession.' Procurement professionals deserve this acknowledgement, playing vital roles not just in the public sector but within organizations across virtually all industries. However, the procurement field has not always been thought of as a strategic function. When taking a look through the history books, it is clear that procurement's organizational role continues to evolve.

Procurement and the Pyramids

The first traces of procurement can be seen throughout ancient history, including the Egyptians in 3,000 BC. Though there was no designated procurement function, materials management aided in the building of the pyramids. The Egyptians used scribes to manage the supply for these massive projects. Scribes played a clerical role, recording the amounts of materials and workers needed on papyrus rolls. These scribes would track orders through fulfillment and were one of the first known in history to be in the procurement profession.

Procurement Revolution

Procurement’s organizational role was not truly recognized until the 1800s. One of the earliest acknowledgements of the procurement function can be found in Charles Babage’s 1832 book, On the Economy of Machinery and Manufactures. He points to the need for a ‘materials man’ in the mining sector who selects, purchases and tracks goods and services required. Essentially, Babbage called for a centralized procurement officer.

During the Industrial Revolution, procurement solidified its importance. Marshall Kirkman’s 1887 book The Handling of Railway Supplies - Their Purchase and Disposition, detailed procurement’s strategic contributions to the railroad industry, specifically in acquiring goods from developed parts of the country and bringing them south and west. In 1886, the Pennsylvania Railroad gave departmental status to the procurement function, referring to it as the ‘Supplying Department.’

Procurement Shifts Again

Unfortunately, the World Wars forced procurement initiatives to shift back away from a strategic role to strictly clerical. Due to the scarcity of materials during war, procurement revolved heavily around order placement. During wartime and the depression, the objective was to obtain enough raw materials, services, and supplies to simply keep the economy running.

It was not until the mid-1960s that procurement once again took on managerial role, on a wide-scale. The concept of material management became the focus during this period. Procurement professionals emphasized competitive bidding, with price becoming the determining factor for most contracts. An increase in trained professionals during this time period helped procurement on its way to regaining departmental status.

The 1980s saw a significant increase in supplier competition. This gave organizations the luxury of putting more focus on supplier quality and dependability. Supplier management became an important factor in procurement and remains so today. By the late 1990s, the role of procurement had begun its transition into strategic sourcing. Procurement officials looked at supplier as partners and long-term contracts were encouraged. This was the beginning of procurement’s modern day evolution.

Procurement Today and into the Future

Today, procurement professionals are instrumental to the success of organizations. They’re responsible for an umbrella of initiatives from the development of a solicitation to the evaluation of and working with qualified suppliers, and everything in between. Ultimately, procurement is having a significant impact on an organization’s bottom line – solidifying its spot at the management roundtable. In the 1960’s a CPO (Chief Procurement Officer) was unheard of; today, more and more procurement heads are helping their organization develop and reach strategic and operational goals.

New technologies continue to evolve procurement. E-procurement solutions, like SourceSuite, are creating a more efficient approach to strategic sourcing. With the shift towards strategic sourcing, e-procurement bid and vendor management software save the organization time so that it can focus on organization initiatives and supplier relationships. SourceSuite’s cloud-based bid and supplier management platforms configure to meet the purchasing needs of virtually any organization. Currently, SourceSuite streamlines the purchasing process for over 900 buying organizations across the country.

Though procurement has a long history, its role as a strategic part of the organizational structure is still relatively new. Procurement’s quick evolution through the last 30 years can be credited to many of the professionals we are celebrating this month. In the years to come, it can be expected that the procurement function will only continue to develop and expand its ability to directly impact successful organizations.

Mike Nolan |


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