Procurement is a business function that is being brought
into the spotlight more frequently nowadays. When first thought of, we often immediately
think of cost and cost reduction as the primary focus of procurement. Though
this is a crucial component, it is certainly not the only topic we should keep
our eyes and ears focused on. As the world of procurement expands and increased
emphasis is placed on it, there will be more variables that businesses will
need to keep high on their radar in order to lead their teams to greater
success.
Traditionally, procurement professionals are thought of as “number
crunchers” who are working extremely hard to achieve the highest quality
product or service for the lowest cost. In this core concept alone, there are
many subtopics that businesses need to emphasize in order to achieve these
better products, services, and costs. For example, how do we determine what a
product or service should cost? How do we know the best way to approach a new
or existing supplier to begin these types of conversations, or negotiations? These
ideas may seem like no-brainers to experienced professionals within the space,
however even the most experienced procurement professional can benefit from breaking
down the process and performing their own market research, analyses, and
develop a strategy in order to organize their thoughts and approach. By
stepping back and thinking about these additional, yet crucial elements, it
allows these professionals to assess the situation from other perspectives.
Even though some of these smaller, subtopics seem silly to
put emphasis on, topics such as determining a strategy or running a quick
benchmark can greatly impact a next step such as engaging a supplier in a
negotiation for cost reduction. Again, cost reduction is primarily seen as the main
component of procurement, however there are several other components that
significantly contribute to a procurement team’s success. Aside from achieving
savings within a particular spend category, this field is also perceived as “the
match maker” function of a business, as procurement is responsible for
identifying, qualifying, and working very closely with suppliers.
Like many business functions, there are a lot of
responsibilities that come with a role in procurement. These roles include
managing supplier relationships, which involves regular communication,
performance evaluations, and cost and inventory assessments. As procurement
rises to fame within businesses, companies will alter their perception of
procurement to heavily include a greater appreciation for those who are
responsible for managing these supplier relationships to ensure smooth operations
and product or service flow. Also included in this section of the practice is
working alongside the suppliers to develop long-term partnerships to develop a
mutually beneficial relationship. This enables the buyer and supplier to
collaborate to determine business process efficiencies and other value-added opportunities
within the current relationship, and again, changing the way companies view the
procurement function.
Procurement is no longer a seemingly simple section of a
business where the main focus is on reducing costs. Perception, both internal
and external, is everything within a business and there is an intense sense of
awareness being placed on the various perceptions of the roles within. When thinking
about how procurement is perceived internally, it can include how the team
identifies suppliers, analyzing data, or developing go-forward strategies. When
considering how it is perceived externally, it involves the impressions that
the suppliers have on the company when working with them, for example.
Ultimately, procurement is a function of many tricks and it is a function that
can be viewed in many different ways. Take some time to reflect on your company’s
procurement operations and identify what you observe in assessing these
activities from different angles.
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