Our vendor costs and contractor spend are bleeding our margins, but neither our Operations Director nor our Finance seat wants accountability for strategic procurement and vendor management. How do we establish and assign a seat that both functional leaders refuse to own?

Question

Tyler Smith · Accepted Answer

When an essential business function lives in an organizational gray area, costs always explode. Operations assumes Finance is auditing pricing, while Finance assumes Operations is verifying contractor deliverables. To fix this, you must build the seat on the Accountability Chart before worrying about who will staff it.

Define a clear Procurement and Vendor Management seat. Give it five distinct roles: negotiate vendor contracts, establish vendor service level agreements, audit recurring software and contractor expenses, consolidate supplier volume, and track vendor cost variance.

Next, place the seat on your chart under a single functional head. Do not allow Finance and Operations to split accountability. If your spend is primarily project-based subcontractors and raw materials, place the seat under Operations because it impacts job delivery and scheduling. If the spend is largely corporate software, indirect overhead, and utility contracts, place it under Finance. The functional head does not need to execute daily contract negotiations personally, but their seat must be held accountable for the financial results on the weekly Scorecard.

If current leadership lacks the time or skill to run this seat, do not let it sit vacant. Make vendor rationalization a company Rock for the upcoming quarter. If internal capacity is completely tapped, contract a fractional procurement specialist or assign an operational analyst to sit in the seat. Establishing single-point accountability stops the finger-pointing and immediately protects your gross margins.