Strategic use of sourcing and procurement can make a concrete difference for businesses today. Seizing new chances for value is one of the most important moves an organization can make, and many such opportunities may reside within the supply chain. This is an intuitive version of process improvement, because it involves tuning up and maximizing an operation that already exists, rather than going out on a limb to start doing something new: Procurement is right there, so why not make it contribute more?
Getting from point A to point B and turning a reactive sourcing department into a strategic one is an option worth studying for today's business leaders. Of course, this transformation takes commitment from all corners, and procurement team members have their own role to play.
Making the value clear
When a supply chain official feels his or her department isn't properly integrated into the company's overall strategic vision, the cause might be innocuous. CEOs may not realize the value better sourcing could provide. Supply Chain Digital contributor Alejandro Alvarez explained that there is room for procurement leaders to take the initiative and explain ways in which the company could improve its overall performance through better supply chain usage.
This is a good tactic when procurement officials realize they are only being called in at the end of a decision-making process to select a new supplier before the contract is finalized. Their job in this case is likely just to engage in tough negotiations and get the price down. Procurement departments can do so much more, however, both when suppliers are being vetted and after the contract is in place.
Alvarez noted that there is room for supply chain officials to get into the mix early on, when companies are vetting their potential new suppliers. At this point, they can perform analysis and use their knowledge and experience to determine which partners will be the best fit for the company. Furthermore, procurement teams shouldn't have to break off contact with suppliers once the ink is dry on the contracts.
Staying involved in contract management and oversight can be a useful function for supply chain officials. As Business.com contributor Chris Crane recently suggested, there is room to perform ongoing analysis. This is valuable for all departments, as the company gets insights into the relative merits of a given contract and the procurement team is allowed a platform to show of the fruits of its own labors in securing the contract. Executives will be able to see what the sourcing professionals did, in clear financial numbers.
Crane added that in addition to staying engaged with supply contracts after they're signed, supply chain officials should also keep lines of communication open within companies' own walls. This means extreme transparency about every detail of ongoing operations. While this means admitting when something goes wrong or an issue erupts, it will serve to confirm the usefulness of the sourcing department in overcoming those problems and keeping procurement on track. This kind of give-and-take with other executives elevates procurement's position and gives it a more visible role.