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HCMWorks Insights

Think About These 4 Things to Improve Your Approach to Procurement

Posted by HCM Works on 5 Apr 2018

To a lot of businesses, the essential service provided by procurement feels complex, cumbersome, and expenses associated to it can make it costly.

To make sure your company’s procurement function is optimized for decreasing effort, cost and risk, you need to improve your approach to your procurement activities and processes.Doing this will ensure you work out the best solutions for your company’s unique needs; making sure you always pay the right price and you don’t miss vital steps in the procedure.

Developing a standardized procurement process will allow your suppliers to understand the steps you take, creating a more streamlined process on both sides of the table and increasing efficiencies. Below are 4 things to think about -  to help you develop a better approach to your procurement.

Think Strategically

It’s very likely that your senior management team addresses strategy in sales, in marketing, in operations, but it’s not uncommon for a large percentage of companies to fail to deploy articulated strategies in their procurement efforts. Your approach to procurement should address strategies for sourcing, deciding on and implementing the correct procedures, system selection / technology, structures, and ensuring purchasing objectives are inline with your overall organizational goals and financials.

Upon identifying and analyzing these strategies, you need to migrate them into clear procurement objectives with linked business performance and planning measurement.

It’s important to have a clear mission and vision, with defined values and principles that can help guide your approach to procurement. Having measurable goals, cost and risk balancing in a strategic setting, comprehensive actions and activities, and continuous performance reviews, will allow you to better measure and manage the procurement function.

Think Technology

To further develop your procurement efforts, value and capabilities, your company should be harnessing technology, the benefits of which include: lowering acquisition cost, speeding up transactions, analyzing and disseminating supplier data and simplifying the routine. The result is higher efficiency, stronger customer service and less time wasted.

There’s a variety of programs from strategic sourcing and e-auctions, to electronic transactional software and market intelligence tools. Harnessing the right program for your business will allow you to manage suppliers, view electronic catalogues, generate contracts, make and track e-purchase orders, optimize your staffing and more.

Investing in an integrated end-to-end automated procurement system should be high on your list of priorities in developing your approach to your procurement.

Think Procurement Value

Your approach to procurement should be rooted in these three core areas: efficiency, customer service and effectiveness. However, these areas are not mutually exclusive and you will need to balance them as they can often compete with each other.

Your approach to efficiency will allow you to reduce costs relating to the procurement function and processes by creating a more streamlined operation. With respect to customer service, procurement needs to provide the best value services and materials to both external and internal customers. Your company needs to effectively lower your total procurement spend with methods like category management and strategic outsourcing.

Think Supplier Relationship

Managing your supplier relationship is an important part of your procurement process. You will see numerous ‘positive’ impacts by creating a stronger and more loyal partnership with your suppliers.

Effectively working with your suppliers creates a mutually beneficial relationship which can help in many ways; from saving you money by reducing the cost of errors, to reducing spend, to letting you take advantage of incentives, vendor deals and offers. All of these allow you to create a better competitive advantage for your company.

With a stronger supplier relationship, you will be able to create increased visibility, resolve problems quickly and have a more streamlined process. Well maintained relationships will also help you prevent losing good suppliers, and ensure a responsive, constructive team of partners.

Adhering to these four elements can allow your organization to develop a better approach to procurement, thereby reducing costs, driving your efficiency, and giving you the best value for your dollar.

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Tags: Procurement, Contingent Workforce

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