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Why Procurement Is Not Advancing To the Next Level

Global competition has changed the way executives value the improvements reached by Purchasing and Supply Management processes. What are the benefits? Many: A more competitive Supply Chain (SC), improved-product development, plus the low-cost advantages related to sourcing from other countries, and quicker times to market, to mention a few.

However, a shortage of talent, the lack of alignment between purchasing and other areas within the company, as well as with far-reaching-company strategies, or fragile or mistaken aspirations, all of these inconveniences disrupting the attempts of countless businesses.

A global survey carried out to Procurement executives puts forward that the function of purchasing has not advanced far enough to move it to the next level and integrate their actions closer to their internal customers; some purchasing units have achieved sustainable cost reductions in areas like Marketing or Health benefits; some others use purchasing as a facilitator for innovation.

It is difficult for almost all enterprises to reach their full capability in Purchasing and Supply Management. Top purchasers must embrace a more thorough attitude towards talent byways of modernising and elevating the Procurement skills in their companies, studying better ways to link employees inside their businesses working together to sharing-collective purposes.

The main problems restraining Procurement

Low aspirations and transactional mentality are big, common problems.

When enterprises fall short to encompassing purchasing in the initial stage of strategic planning, affect the entire business.

To stay behind in your efforts to include product innovation, widely embraced by the competition, due to the company purchasers single-minded focus on price, resulting in a lack of collaboration.

Lack of collaborative work; a poor alignment with other areas of your business, especially to the Finance-group priorities put off the savings and avoid accomplishing the company goals.

How do we achieve it?

  • Executives have to set the grounds to enhance the course of action to intelligent Procurement.
  • Companies should set high objectives to maintain the equilibrium between their insights in the business and a bright outlook on how to reach it.
  • Top purchasers should put particular importance to line up their sourcing efforts in detail with tactical business goals.
  • Do not overlook the importance of talent, so hire purchasing managers with the right knowledge and better understanding of their customer’s demands.
  • Support better Procurement management, grasping basics skills to get significant savings and extra benefits. It should be a priority.
  • Procurement needs to benefit from cost-saving possibilities and higher profits in this globalised market.
  • Extend the influence of Procurement within the organisation by strongly linking its activities to those of its internal customers, product developers, and other functional groups, to discover new ways of adding value.
  • Extend your Procurement activities into not-noticed sections in the past or areas that have shown to be too complex to optimise.
  • Contrast the company capabilities against those of outsiders to identify possible outsourcing partners and afterwards, managing the developing of such relationships.
  • Consider a government agency where purchasers can help the Human Resources (HR) staff to standardise the agency-benefit plans against alternatives.
  • Team with HR to develop and evaluate different possibilities side by side, and to test their interest to the staff previous to implementing any new strategy.
  • Procurement execs bring to the project their analytical know-how, their skills in evaluating suppliers and reaching a deal with them, while HR legitimate the new design.
  • Introduce systematic performance metrics, and designed an autonomous general-counsel agency operated by expert lawyers in purchasing fundamentals.
  • Work closely with others inside their companies to experiment and improve the way they distribute products or services to market.
  • Sharing a supplier improved the relationship between two business units.
  • Support the goals of other well-designed groups. Some companies already use sourcing hubs in low-cost countries as the strategic site to produce extra sales in those markets.
  • Procurement head should team up with the Sales unit to work out a way to handle the list of items consumers check to bring in incomes and diminish the risk of supply interferences linked by significant elements.

Strengthen the innovative Procurement

Purchasers operate as an essential connection between a company supply base and the rest of its content chain to make a significant improvement on its large-scale goal to source a high proportion of its merchandises from external businesses. For instance, Apple ties together its supply base to outsource much of the development of the hardware and software of its devices.

The approach to innovation of an enterprise it must echo its strategy, industry, and its competitive standpoint too, and in the long run, liberate the precious time of the operators who use such tools, and who could then stand up for a significant expansion of the factory.

Conclusions: Although several organisations are giving considerable strides to take Procurement to the next level, no one has reached its maximum capacity in all area; still, these purchasing standouts detaching themselves from the crowd, can offer insights into the skills and tactics of Procurement, necessary for getting wide-ranging achievement in purchasing. Take your Procurement to the next level!

This article was originally published on Prophetic Technology by David Food.

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