Five ways to create value in procurement
The role of procurement has changed. No longer is it just about purchasing goods and services, but it’s about ensuring operations run smoothly all year round. This means establishing requirements, researching the market and evaluating vendors, as well as negotiating contracts and managing risk is key. Here are five ways procurement executives can gain value in their organisations.
- Cut costs
All businesses want to reduce their costs without damaging their profit margins, but how is this achieved? Through sourcing the right suppliers, procurement staff actively help reduce their company’s outgoing costs and operational risks. However, finding reliable data and insight on potential suppliers is often expensive and takes time.
2. Drive innovation
Procurement professionals hold a prominent position within a business. They are the people that choose which suppliers to work with and their choices often define their organisation’s overall supply chain. By choosing suppliers that add value, procurement teams can place their company in a better overall position.
3. Leverage good data
There is a difference between collecting as much data as you can and basing decisions on high-quality supply chain data. A complex supply chain that involves product development, engineering, packaging, delivery, sales, forecasting and more, utilising data correctly creates insights that drives revenue and scales efficiency.
4. Drive growth in new markets
The best opportunities for value growth are often found outside established markets and supply chains. Previously untapped markets are often full of eager companies seeking to innovate and develop at an increasing rate. However, moving into the unknown requires a lot of research, knowledge and assurance.
5. Help with CSR compliance
Corporate social responsibility (CSR) is a big area of focus in business. The reputational damage that can come from non-compliance within an area of CSR, such as the UN Sustainable Development Goals, because of its business supply chain can often be irreparable. As a result, a detailed pre-qualification process is crucial for procurement professionals.