Good Practice Example
Taking an Entrepreneurial Approach to Purchasing at Babson College
I, Summary:
The document describes an entrepreneurial approach to purchasing at Babson
College, led by Teresa Pitaro and her team. The purchasing team at Babson has
transformed the procurement culture by expanding its influence, engaging in
areas such as contract management, construction, and leveraging technology to
optimize processes.
Key strategies include:
1. Process-Driven Purchasing: Utilizing collective contracts with other
universities to reduce costs.
2. Expanding Influence into Non-Traditional Areas: The purchasing team
became involved in construction projects to optimize spending.
3. Focus on Centralized Contracted Services: Collaborating closely with
suppliers to enhance service quality.
4. Technology Integration: Implementing e-procurement systems and
procurement cards (p-cards) to automate processes.
Additionally, the document discusses topics such as risk management, supplier
collaboration, and leveraging external expertise to improve operational
efficiency.
II, Answer questions:
1. Why are more top managers recognizing the importance of purchasing/supply
management?
Purchasing and supply chain management are no longer just support functions
but play a strategic role in helping organizations reduce costs, optimize
resources, and improve operational efficiency. The key reasons include:
Cost Optimization: An effective purchasing process allows organizations to
negotiate better prices, reduce waste, and maximize resource utilization.
For example, Babson College’s purchasing team collaborated with the
Boston Consortium to cut office supply costs by 5-8%.
Operational Efficiency: Strategic procurement helps automate processes,
reduce administrative work, and speed up order processing. At Babson,
the e-procurement system streamlined the ordering process significantly.
Risk Mitigation: A professional procurement process minimizes legal,
financial, and operational risks by ensuring transparent and compliant
contracts. Babson implemented a thorough risk assessment process when
selecting a bus service provider to ensure student safety.
Supporting Innovation: Strategic procurement can drive innovation by
partnering with suppliers that offer advanced technologies. Babson
switched print service providers to enhance service quality and integrate
sustainability practices.
2. Should organizational purchasers behave like entrepreneurs? Why or why not?
Yes, because an entrepreneurial approach enables procurement professionals to
be more proactive, innovative, and strategic rather than just handling
administrative tasks.
Innovative Thinking: Entrepreneurs constantly seek ways to improve
processes and reduce costs without compromising quality. For example,
Babson expanded the purchasing team’s influence into construction
projects, rather than leaving it solely to the facilities management team.
Value-Driven Approach: Entrepreneurs focus on overall value rather than
just price. Babson not only reduced transportation costs but also ensured
high safety standards when contracting bus services.
Flexibility: Entrepreneurs are willing to experiment with new approaches
to achieve higher efficiency. Babson changed its print service provider
when the previous one failed to meet expectations.
Strong Collaboration: Entrepreneurs understand that success depends on
building strong partnerships. At Babson, the procurement team worked
with students to select the best water filtration system, reducing plastic
bottle usage.
3. With the rise of AI, robotics, and automation, what knowledge and skills are
required for a purchasing professional?
Technology is transforming procurement, requiring professionals to develop new
skills, including:
Data Analytics: AI and big data analytics help predict price trends,
optimize supply chains, and identify potential risks. Procurement
professionals should be proficient in tools like Power BI, Tableau, or Python
for data analysis.
Digital Supply Chain Management: Understanding blockchain, IoT, and
automation enables better transparency and efficiency in supply chain
management.
Data-Driven Negotiation: AI can provide insights into supplier
performance, helping procurement teams make more informed decisions
during contract negotiations.
Risk Management: While technology can predict risks (such as natural
disasters or supplier fraud), professionals must still assess and handle
these situations effectively.
Strategic Thinking: As automation takes over repetitive tasks,
procurement professionals should focus on strategy, innovation, and
supplier relationship management.
4. How will technology impact supply base innovation and risk management? Will
it allow supply managers to spend more time on these areas?
Technology is transforming procurement management, enabling professionals to
focus more on innovation and risk mitigation.
Impact on Supply Base Innovation:
AI can analyze data from multiple sources to identify suppliers with
the most advanced technology.
Blockchain ensures transparency in the supply chain, reducing
fraud and verifying product authenticity.
IoT enables real-time inventory tracking, optimizing ordering and
logistics.
Impact on Risk Management:
AI can predict risks based on historical data, such as supply chain
disruptions due to natural disasters or market fluctuations.
Technology automates supplier audits, ensuring compliance with
safety and ethical standards.
Blockchain enhances transparency in transactions, reducing
contract fraud risks.
Will technology allow supply managers to spend more time on these areas?
Yes! As manual procurement tasks (such as order placement, invoice
tracking, and inventory checks) become automated, professionals can focus on
long-term strategies like developing supplier partnerships, exploring new
technologies, and optimizing the supply chain.
