“Not adding value is the same as taking it away.”
(Seth Godin)
How to Make Procurement an Added Value to Your Company
As written in our Creative Procurement blog, Procurement should be an added value for your business – not an added weight. However, it’s easier said than done, so we bring you some tips on how to apply this into practice. The purpose of every business is not only to provide goods or service, but also create profit in return. In order to achieve desired economic results, it is of crucial importance for a company to plan future goals, as well as to minimize costs.
Throughout this whole process, Procurement carries the key role and can significantly contribute to goals stated. Through its actions, Procurement directly affects prices and thus the profit of the company. If a company manages to have an efficient Procurement department, good earnings cannot be missed. Procurement is a process that needs to focus on short-term but also long term goals of the company. It does not include purchase only, but also logistics, delivery, acceptance, testing and monitoring of goods or services.
The greatest quality of a good Procurement Professional is knowledge on the market, as well as good interpretation of analysis data obtained. That way, purchase is made realistically – in accordance to the actual situation on the market, and in the company on the other hand. The task of Procurement is to set objective short-term and long-term goals, define a clear structure, system (procedures and documentation) and procurement strategy, develop procurement according to budget, select competitive suppliers and seek for new ones, maintain good relationships with existing suppliers, as well as make relevant decisions. Furthermore, here are some examples of how to add value to your company through Procurement:
- Make an analysis and cost plan, group the costs and make your procurement targeted and systematized.
- Constantly negotiate with suppliers, in line with market changes.
- Educate Procurement Professionals in order to give them great market knowledge. This way, they will know what quality and prices to expect for a particular product or service, which is valuable for making negotiations.
- Provide your Procurement Department with quality software solutions, such as Ensolva. By implementing the procurement software people work faster, which leaves them plenty of time for managing a large number of activities in order to increase efficiency.
Another significant procurement function is to determine “value for money”, in line with company goals and strategies. Procurement adds value to the company through risk management, filtering requests and identifying company’s real needs, as well as recognizing opportunities in order to create financial and non-financial benefits. At least 70% of the project’s success and profitability depends on the efficiency of the procurement strategy. It helps analyzing and managing supplier’s contribution and market conditions. Through defining the procurement strategy, it is necessary to take advantage of external opportunities that affect the company’s goals and strategies considering money, quality, risks, innovativeness and sustainability factors.
The Procurement Department must work responsibly and relentlessly in order to reduce losses and increase savings, but without loss of quality. Despite the fact that the Procurement Department often does not get enough credit, it is important to highlight that it holds the key to company’s success. Procurement can bring significant success for the company but, on the other hand, if Procurement is not performing well, it can cause considerable losses. For this very reason, companies have to understand the importance of the Procurement Department, as well as its digital transformation. Choose Ensolva as your software solution and achieve excellence in your business!
