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.