We all know how to buy, right? We do it every day. How hard can it be? Despite decades of delivering business benefits and taking costs out, Procurement often has to justify its own existence. This is particularly true in organisations where Procurement is predominantly seen as an order placing function, or at best as a tendering machine. So, if everyone knows how to buy, what exactly is the point of Procurement?
People in many departments are involved with the activity of buying in one way or another. For those who see negotiating with suppliers as a key part of their job, Procurement’s “interference” is often not welcomed. They may take a defensive stance and say things like, “You don’t have my technical knowledge. So, therefore you cannot negotiate the deals I can”.
Others, whether or not they interact with suppliers, may say things like “Procurement doesn’t understand us. We are not buying stationary here!”
Empowered Procurement
These are outdated perceptions. Reality today is that the empowered Procurement department has evolved into a strategic business function. A function which combines a number of skills necessary to interact intelligently with the supply market. I am talking about key skills required for effective:
- supply strategy development;
- stakeholder management;
- negotiation;
- business analysis;
- supply market research;
- tender process management;
- project management;
- cross functional working;
- risk management.
And yes, procurement professionals also have the ability to dive deeply into technical areas when that’s required. It’s the sum of these parts that makes an empowered Procurement function such a business asset to an organisation.
Be as clever as your vendors
Sales organisations have for long been well resourced and employ sophisticated strategies and tactics to grow markets, aka sell more stuff to us. It makes sense to interact with supply markets with equal sophistication. Anything less means lost opportunities and sub optimisation. This translates into loss of shareholder value. And who wants that…
Instead, invest in Procurement and see your organisation blossom. It’s like a secret weapon. That does not necessarily mean that Procurement should do all the buying, but the process of procurement should be owned by the Procurement function. A process that ensures value optimisation, fairness and transparency. These benefits are the point of Procurement.
Armand Brevig is the Managing Director of Procurement Cube. We have created an effective and lean Procurement product that unlocks hidden business value for SMEs. It’s a Procurement Powerhouse inside your organisation that delivers Value for Money, Total Cost Control and Enhanced Competitiveness. The approach builds fit for purpose capabilities that deliver sustainable strategic value. The focus is on what really matters in your unique situation.
