3 Essential Qualities to Drive Effective Procurement
Throughout history, advances in technology have allowed people to pursue creativity expand their minds to develop even more technological advancements. As technology advances, so does productivity, increasing the capacity for future technological advances.
In the business world, these technological advances, creative pursuits, and increased productivity translate into higher profits. Application of these concepts: technology, creativity, and productivity can and should be applied to every facet of your business so that you can be as effective and efficient as possible.
3 Essential Qualities to Drive Effective Procurement are:
- Developing Fundamental Capabilities,
- Bringing Influence Throughout Your Organization
- Embracing Innovation.
Having a sound procurement strategy allows companies to survive economic downturns by applying cost-cutting measures when necessary and to adjust appropriately when the situation changes.
Being able to deliver on all three qualities is what separates high-performing from weak-performing procurement organizations.
Increasing Fundamental Capabilities
Without the necessary foundation and base level understanding of what your organization needs, a procurement strategy will not be effective. Being capable of delivering basic procurement is the first step towards increasing efficiencies.
Many companies are stuck trying to get through their procurement process by focusing only on improving fundamental capabilities. The problem with merely getting by is that unless something changes, your situation won”t improve. Companies can get stuck muddling on with an ad hoc solution for years – not realizing that there are more effective alternatives. Most companies focus on developing their basic functions for a few key staff members without successfully implementing organization-wide adoption.
If your company already has a basic procurement strategy in place – take time to improve it. Are you stuck in a pen and paper system? Consider moving to e-procurement software.
Spread Influence
Procurement is most effective when the roles of users, suppliers and management are aligned with the strategic direction of an organization. A CPO or CFO should foster an environment where procurement policies are adopted throughout an organization to develop spend saving and cost-effective results to an organization. A strong strategic leader will be able to influence their company and enable forward strategic thinking. Ensure your whole organization is trained to use your procurement process – this can reduce or even eliminate maverick spending and will increase spend visibility.
While the setup, monitoring and implementation of a system should be left to the procurement team, the purchasing process should be simplified and distributed throughout the organization. An influential leader will understand the importance of strategic adoption but what separates a great leader is their desire to embrace innovation.
Ask your staff for feedback. Find out where roadblocks or gaps in knowledge are – it”s at easier to get staff buy-in when they feel genuinely included in the process.
Embrace Innovation
By combining fundamental capabilities, organization-wide adoption, and innovation, companies are able to outpace their peers. Procurement relies on the ever-changing marketplace and without embracing innovation companies can easily lose their competitive edge. Procurement has the opportunity to delve into buying patterns, consumer tendencies, vendor preferences, contract negotiation, and a wealth of relevant data.
Organizations that capitalize on data and absorb the metrics into their strategic planning are oftentimes much more prepared when dealing with changes in the market. They are more willing to adopt new technology, have a company culture ready to adopt policy change, and have more than basic capabilities, and are in a position to develop advanced, forward-thinking strategies.
Effective procurement combines base-level skill with company influence while embracing innovation. It can seem like a monumental task to evolve your organization but radical change usually starts with one small step. Take it.
