Evaluating the strategic positioning of the procurement function and its Impact on operational efficiency: A study of private commercial banks in Bangladesh

Abstract

Procurement in the private banking sector of Bangladesh is gradually moving from a support role that focuses on transactions to a more strategic role that contributes directly to efficiency, compliance and competitiveness. This study examines the positioning of procurement function within private commercial banks (PCBs) and how it impacts on operational outcomes. Data were collected through a structured survey of 52 banks, complemented by open ended responses. The analysis was also guided by five core objectives that is assessing the current strategic positioning of procurement, examining its role in workflow and compliance, evaluating its effect on operational efficiency, finding obstacle to strategic integration and suggesting ways to make things better. The results indicate that procurement is progressively involved in strategic planning, aligned with long term objectives and often has access to senior management discussions. However, top management recognition of procurement remains inconsistent and in many banks procurement is still regarded as administrative rather than strategic function. Procurement plays a strong role in operation perspective by ensuring deliveries are on time, suppliers follow compliances and risks are managed through contract clauses. At the same time, it helps to improve vendor performance, make workflows more efficient & improve quality. This research also shows that banks that strategically place procurement report better efficiency, better coordination between departments and fewer delays. But due to lack of right procurement skills, progress do not reach the satisfactory level. Enough training or cooperation between departments seems very low. However, there didn't seem to be a big problem with senior management support regarding the procurement decisions making process when needed. This shows that leaders are starting to understand the importance of procurement. My study finds that structured professional training, knowledge of digital tools like e-procurement, ERP and better cooperation’s between departments are all clear priorities for making procurement's role stronger. The results also show that procurement function in private banks is changing from a purely transactional model to a partly strategic framework. It is necessary to realize the potential of procurement function to make businesses more competitive & drive efficiency. In this connection, private banks need to focus on building capacity, invest on digital systems and influence departments to work together.