It’s human nature to find a routine and stick with it. After all, why would anyone want to abandon the comfy status quo voluntarily in search of uncharted–and possibly rife with danger–territory? Surely, it’s best to stick with what you know, right?
Wrong. Simply treading water will get you nowhere. And, when it comes to the business realm, maintaining the status quo could equate to missed opportunities, untapped potential, and losing your foothold in the marketplace.
One area that many companies, typically, overlook during restructuring, revamping, and setting a course for the “unknown” is procurement. With so much riding on this aspect of your business and many new procurement technologies at your disposal, this is one area that all companies need to address.
Here are a few important considerations to keep in mind when rethinking your current procurement strategy.
Avoid “Band-Aids”
When ironing out the wrinkles in any internal process, it is tempting to focus on a series of small “spot fixes” rather than opting for a complete overhaul. But, sometimes, the big overhaul is what is needed.
As “Why and How to Embrace a Source-to-Settle Solution” warns, a collection of partial solutions is often needlessly complex, and the breakdown of one can cascade effects throughout the procurement cycle. When instituting any change, it is important to understand the big picture and how any modification to a process within the big picture will impact the cycle as a whole.
One Way Does Not Fit All
When it comes to structure–centralized versus decentralized–it is important to remember that there is no right or wrong model, no matter what the proponents and opponents of each may tell you. According to “10 Ways the Procurement Profession Can Improve,” a company’s structure should shift with its business strategy, adopting greater centralization in tough times and decentralizing in times of growth. Structure need not be of rigid construction.
Align It With Other Goals
Procurement does not play a minor “supporting role” within your company. In fact, getting the right goods into your customers’ hands in a timely fashion and at the right price is the whole point, isn’t it? That is why it is necessary to make sure that your procurement strategy is congruent with your company’s mission statement and that your employees understand how their individual roles contribute to the company’s ability to achieve its objectives.
They need to be able to perceive the big picture and their role within it.
Be Fiscally Responsible
When re-examining your company’s procurement strategy, it is important to keep an eye out for savings opportunities that can reduce operating costs withoutsacrificing customer service or product quality.
“Procurement Savings: Ways to Increase Your Profits” points to several areas that should be considered within the Purchasing Department, itself, including reviewing your suppliers’ terms and discounts, consolidating your vendors and deliveries, and combining purchasing requests. Once you start looking at each aspect of the procurement process with a wary eye, you will likely identify a myriad of cost-saving options.
Embrace Technology
If you are still relying on pencil and paper spreadsheets, it is time to enter the twenty-first century and adopt a supply chain software package.
Begin by conducting some research to answer the following questions. What systems are other companies within your industry utilizing? Can they be easily integrated with your business’s other software systems? Can it be customized to meet your firm’s unique needs? By answering these queries, you will be better able to identify which system is the best fit.
And, once you adopt a software system and your staff masters the initial learning curve, you will wonder why you clung to old-school processes for as long as you did.
Procurement plays a far too significant role in your company’s success to be overlooked or left to steep in the status quo. By streamlining processes, introducing new technologies, and rethinking the way you perceive purchasing, you can give this valuable aspect of your business the attention–and support–it deserves.
What is the secret to your Procurement Department’s success?