PazdelRío

Mónica Andrea Blanco Barón

Economic Competitiveness Champion

Mónica Andrea Blanco Barón is Director – Raw Materials Procurement & By-Products Management, PazdelRío., Colombia's only integrated steel company, with over 13 years of Supply Chain experience primarily in Strategic Procurement, Contract Management and Logistics. She holds a Master's degree in Supply Chain Management from Universidad de los Andes and is recognized for transforming procurement into a strategic value driver within complex industrial environments.

The Hidden Power of Procurement

Latin America holds immense economic potential and an opportunity that is rarely mentioned: the procurement function. While the region debates competitiveness, innovation and development, the very engine that could accelerate all of this remains underutilized in almost every organization.

Every time a salesperson closes a deal, there are applause and celebrations. Yet every time a procurement professional saves millions, it goes unnoticed. And still, according to an analysis by LightSource based on real data from an automotive company, that saving achieved through procurement is worth up to 20 times more for EBITDA than the celebrated sale. This reality remains invisible in much of the business world and it is costing us dearly.

When the procurement function achieves its savings target, the company is nearly twice as likely to reach its overall business objective. According to McKinsey, which analyzed more than 340,000 transformation initiatives across over 1,000 organizations, procurement represents more than 20% of the total financial impact in a transformation program. And the reason is simple: savings flow directly to EBITDA. In contrast, every dollar earned through sales must first pass through all operating costs before reaching the bottom line and that is where the difference lies.

Why Procurement Deserves a Strategic Seat

Yet this financial impact contrasts sharply with the reality in many organizations, where strategic attention to procurement is scarce. There is no university degree that specifically trains procurement professionals, people arrive from different academic backgrounds and build their expertise through experience, learning the technical aspects of each industry, finance, foreign trade, legal frameworks, logistics, negotiation with internal and external stakeholders and data analytics. They end up being among the most well-rounded professionals in the entire organization.

  ​Procurement is not a support function. It is one of the greatest drivers of EBITDA, resilience and long-term competitiveness.  

Despite this complexity and impact, the Chartered Institute of Procurement and Supply points out that organizations allocate more than two-thirds of their revenues to procurement spending and yet few functions receive less strategic attention than this one. This challenge extends beyond the private sector. According to the OECD's Government at a Glance: Latin America and the Caribbean 2024 report, inefficiencies in public procurement cause estimated losses in the region of around 1.4% of GDP annually. In 2022, 17 out of 19 Latin American countries surveyed did not recognize public procurement as an independent profession within public administration compared to 39% of OECD countries that do.

Building Resilience through Strategic Procurement

The world and the supply chain are becoming increasingly complex and unpredictable. In this context, companies with strategic procurement are not only more profitable, they are also more resilient. Those that lack it are more vulnerable and face threats to their operational continuity and financial stability. Depending on a single supplier, lacking source diversification and failing to actively manage risks can have devastating consequences. Companies that fail to build competitive strength cannot generate the profitability or competitiveness needed to contribute to their region's economic growth. When an organization manages its procurement well, the impact does not stay within its walls, it becomes a driver of development across the entire value chain and, ultimately, for the country.

Procurement can generate a cascading effect as companies shift from transactional buying to strategic procurement, redirecting their focus toward initiatives that create real impact. The most critical internal starting point is automation. Many procurement teams cannot make the leap to strategy because they remain trapped in operational tasks; it is urgent to automate routine purchasing in order to free up the time and attention that strategy requires.

Once that operational time is freed, the next step is to establish a proper category classification, one that defines the sourcing strategy for each category, including negotiation approaches, risk identification and mitigation, the right buyer profile and the KPIs to measure performance. A useful tool for this is the category matrix, which positions each spend category based on its value and impact on the business.

But classification alone is not enough without the right talent. It is essential to invest in training that equips procurement professionals with the specific skills needed for their industry skills that become their competitive edge at the negotiating table. It is common to find that onboarding and training programs for buyers are the same generic ones offered to all employees, with no tailored plan covering the knowledge and capabilities required to strategically manage the company's spend.

Extending Value Across the Supply Chain

The impact of this internal development does not stop within the organization; it extends to supplier development as well. By working alongside regional suppliers, companies can help them specialize in what is needed, so that together, the company bringing technical knowledge and the supplier bringing operational capacity, they generate mutual growth. This enables the company to build closer, more reliable supply sources that reduce the risk of shortages and contribute to the region's economic development. Collaborative innovation also plays a key role: rather than limiting the relationship to a transaction, the goal is to leverage suppliers' knowledge and capabilities to continuously improve internal processes and reduce costs.

Beyond profitability and resilience, sustainability must remain a priority. Every company has a responsibility to actively lead compliance with applicable sustainability initiatives and to work hand in hand with its suppliers to achieve them. This includes making the most of the co-products generated in the production process, which can become raw materials for other industries, contributing to the circular economy. Environmental and social criteria should be embedded in supplier evaluation frameworks, carrying real weight in final sourcing decisions. Where possible, preference should be given to suppliers who offer recycled materials, eco-friendly packaging or processes with a lower environmental footprint.

And if all of the above happens within individual companies, there is an even more ambitious step that can become a true differentiator for regional competitiveness: collaboration between organizations. This means pursuing strategic alliances, for example, group purchasing arrangements that distribute logistics costs and lead to better final pricing or partnerships with more advanced organizations for benchmarking and the adoption of practices that can be replicated in each context. The goal is to stop operating as isolated islands and competing against each other and instead, build ecosystems with the shared objective of first strengthening individual companies and through that, contributing to the region's growth.

A Call to Elevate Procurement

All of this is possible but it requires two decisions: the decision of procurement professionals to become strategic in their work and unlock the full potential they hold as individuals and as the function with the greatest capacity to drive EBITDA; and the decision of business leaders to broaden their perspective and give procurement the same strategic importance they give to sales.

The potential is there. All it takes is the will to transform it. Can a procurement function change the competitiveness of a country? The data says yes. The decision to make it happen is ours.