This informal CPD article on Recognition for Procurement was provided by Katie Jarvis-Grove, Managing Director of Aspire Procurement Solutions, formed in 2016 to add a different dynamic to the way purchasing is undertaken.
Importance of an effective procurement department
For many years I have been speaking with both SMEs and global conglomerates to try and explain the importance of having an effective procurement department. Whilst a healthy profit is being generated the amount of CEOs that are interested in truly understanding the benefits that procurement can bring has been limited. In my opinion procurement as an organisational function has been, until very recently, overlooked in relation to the value it can contribute towards achieving a truly sustainable business.
Throughout my 25 years within the profession I have witnessed the evolution of purchasing to procurement and finally in 2020 due to circumstances which were never expected, foreseen or wished for, the profession is beginning to get the recognition it deserves as being a key strategic area of industry.
Due to the poor economic situation in which world trade finds itself, procurement professionals are finally being called upon to do what we have always been doing. The difference now is that more organisational leaders are gaining an understanding and appreciation of the benefits and value that effective procurement can bring.
Historically when a business wanted to increase its profit many stakeholders were of the opinion to simply up the selling price. Whilst this can be a very effective way to increase the revenue generated, in today’s society this tactic would not be accepted by customers and consumers. During this pandemic it has become apparent to many industry leaders that simply upping the selling price will not provide them with a sustainable business model. In these difficult times procurement as a function has gained the credibility that it has deserved for many years.
Cost reduction through Procurement
Procurement Departments continue to provide their organisations with cost reductions, LEAN approaches and continuous improvement, but this is now critical to the survival of some businesses. Price, whilst a key factor in any business decision, is beginning to be understood as being just one element of the total cost. Procurement professionals are now able to make their cases heard for achieving economies of scale, engaging with reputable suppliers, achieving high end quality and looking to reduce carbon footprints. All of these areas have suddenly gained more focus as organisations’ priorities have shifted.
Making sure supply chains are agile
The demographics of the population are changing in a way that is unprecedented. Things such as lifestyle, income and culture are constantly moving and organisations need to be in a position where they can react to these changes. Skilled procurement professionals within a strong procurement department are able to work with these ever changing demographics by making sure their supply chains are agile. The skill in managing an agile supply chain includes having exceptionally strong supplier relationships, promoting flexibility and encouraging innovation. These are skills which qualified procurement professionals have always had and are finally able to showcase to a captive audience.
Let’s hope that once this period of uncertainty and unrest has passed, procurement functions will have proven themselves not only to the organisations in which they are situated, but also to other industry leaders, to be a department that is not just about spending money but a department that is populated with skilled, dedicated and professional individuals who truly understand where cost can be cut and value can be added in any supply chain.
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