It’s more than “shopping” – How good Procurement can help you reduce risk and increase your profit

What the heck is Procurement? You’re not alone. It’s not a universally understood discipline, other than perhaps maybe “it’s a bit like shopping”.

If you’re an SME and spend a significant part of your revenue with 3rd party suppliers, how can you ensure that supplier risks and costs are managed effectively, across your organisation?

It’s a bit of a dilemma for many businesses. Budgets are tight, so that can preclude the luxury of having in-house Procurement specialists. Not having access to these specialists can result in increased supplier costs and more pressure on your budget. And the cycle continues.

Large corporates on the other hand, usually have well-resourced Procurement departments and know the value that Procurement can bring.

There’s a bit more to Procurement than simply shopping for the best deal though. The right Procurement expertise within your business can make a huge impact:

  • Spend control – making sure you get value for money from your suppliers
  • Profit improvement – negotiating better deals
  • Supplier selection – the right suppliers, not just for today, but also for your future needs
  • Risk management – protecting your business by mitigating supply risks
  • Environmental, Social and Governance (ESG) obligations – know what you have to do

But what are the options you could explore if you think your business would benefit from any of these? There are several options:

If you do have an in-house Procurement team, check how they spend their time. Are their days filled with transactional, non-value-adding tasks? If your team is inundated with raising purchase orders, matching invoices, or fire-fighting recurring supplier issues for example, they won’t have the time to focus on the more value-adding strategic activities.

Invest in training your team. For some reason, people seem to “fall into” Procurement roles, perhaps without having received any prior training.

When you think of the sums of money they’re spending, the responsibility they have and the potential opportunity to make a real difference to your business, investing in building their capability makes sound business sense. The ROI is substantial.

Consider hiring a specialist trainer to come in to train your team, or find a good public “open course”, or find on-line courses on LinkedIn Learning or Udemy.

If you don’t have your own Procurement team, a cost-effective way to acquire specialist expertise just when you need it could be to hire a Procurement consultant. It’s a more flexible option than hiring a contractor as you won’t be locked-in to a, say, 6-month contract.

Finally, Procurement is a specialised profession. Ultimately, having your own people with the capability to manage your spend and suppliers effectively will mean that an investment into hiring in-house Procurement resources will pay for itself.

Please get in touch with me if you’d like to explore how good Procurement could help your business.

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