When running a business and finding ways to save money, procurement is often not the starting point. It should be. Often organisations, for a number of different reasons, don’t approach their procurement strategically. This is odd, because rationally, it is not hard to see how the way an organisation purchases goods and services can impact a bottom line.
Procurement is often overlooked, however, because organisations, especially ones that are large and complex, get into a way of doing things and change seems to be a huge undertaking. To continually question the value of all purchases and re-evaluate long-standing relationships with suppliers it does take a change of mind-set. But no matter how much of a mammoth task, investigating your procurement approach can be very enlightening and bring significant financial rewards to your company.
If your procurement strategy has never been analysed, it might be worth thinking about why not. It’s safe to say the potential risks from ineffective procurement outweigh the reasons for not taking the time and resource to investigate.
In this series of blogs I will be covering the full procurement process from start to finish. I’ll begin with how to set-up procurement so it has the best possible chance of success.
My first two pieces of advice:
1. Procurement can often be treated like a back-office function, hidden away from the consumer-facing frontline of the business, and this is a mistake. Procurement professionals need strong connections and regular interactions with the frontline to check how their buying decisions are impacting customers. Senior stakeholders need to trust their procurement teams to work closely with the people in the businesses that are directly affected by what is bought. In the next blog I will give examples of how this can work in practice.
2. Someone needs to lead: until the powers that be decide that a function needs to perform better, nothing will change. Targets and objectives need to be set from the top down and senior executives would be wise to realise the potential benefits a more intelligent approach to procurement could bring. One of the quickest ways to understand this is in acknowledging the risks of a poor process.
In the following blogs, I’ll be giving practical advice using case studies and tips
about what needs to happen to bring about positive, significant and sustainable changes to your organisation’s procurement processes.
About Richard McIntosh
Richard is Managing Director of INVERTO UK, an international management consultancy specialising in procurement. He has led and delivered many procurement consulting assignments, particularly strategic sourcing, organisation and process re-design and people and skills development. He has worked across many sectors, private, public and not-for-profit, leading procurement projects for clients such as Nokia, Visa, Aberdeen Asset Management, eircom, the Ministry of Defence and the NHS.