July 19th, 2017

How to Operate the Successful Procurement Function

How to operate the successful procurement function?

Following the 2008 recession, procurement has helped many companies to reduce their spending. And as the economy recovers, it is becoming a field where businesses can find extensive benefits.

According to Duncan Brock, director of customer relationships at industry body the Chartered Institute of Purchasing and Supply (CIPS), Procurement has the capacity to have an impact on the entire organization. He also states that it is crucial to maintain an organization’s reputation by choosing the appropriate fit for the supply of goods and services.

Any procurement process must make certain it possess the skills required to produce results in matters such as cost, innovation, compliance, quality and flexibility. Characterizing the skills in the right place is imperative to maximize the chances of success in the process of procurement.

And the right talent should be properly used and nurtured while cultivating the communication at the company and with suppliers because according to Carlos Mena, a supply chain expert at Cranfield University, “procurement in most organizations spends more than 50 per cent of business revenues”.

A huge part of businesses struggle with this seeing that forming a strong procurement team is difficult because the processes are not attractive compared to other functions in a business.

Infact, this has become a challenge for the chief procurement officers. The results of a procurement staff study shows that the departments must work on strategies to help fill the information gap leading to the failure of many companies not having a centralized financial and contract management.

There are methods to solve this problem. “Start with remuneration,” suggests Dr Mena, forewarning that CPOs themselves tend to be paid less than their counterparts. Furthermore, interesting aspects of procurement, such as the development of collaborative relationships, innovation and sustainability, need to be better communicated to potential employees.

Traditional procurement teams tend to possess good at analytics, negotiation and contract management. However, influential leadership and change management is also necessary to become much stronger.

A many procurement professionals now prefer using eProcurement tools like Kobster’s Elite to have better results. Elite simplifies the entire procurement process by digitizing the most important functions such as generating POs, Reports, Invoices etc. It also simplifies sourcing by purchasing bulk products at one place.

Such awareness can help procurement to function much effectively. One of the biggest mistake companies tend to make is, they begin procurement functions with cost, which instead they should start with value creation.

Organizations must also excel in their communication with suppliers to build long-term strategic relationships.
Business networking is one way of improving communication with the suppliers. The social networks has already enabled better collaboration through which the actual strategic plan is achieved. Thus, a successful procurement function can operate with these factors in existence.

March 16th, 2017

How to become a Procurement Superstar?

How to become a Procurement Superstar?

One of the key characteristics of a successful procurement professional is the ability to organize their projects in a way that causes them to get the most done in the least amount of time. Efficiency is at the core of the skill set you need to possess if you’re going to solicit, manage and complete multiple projects. However, you need very specialized skills to do the job right. But no worries, if you apply some of the most basic business principles to your tasks, you’ll quickly excel at your job. Let’s take a look at how these common traits can be used to propel you to procurement perfection.

Why do Procurement Professionals Need to be Efficient?
The life of a procurement professional is a busy one. After all, you are the one working with several departments on multiple projects at one time. You are also the one to ensure that all company purchases are not only made on time, but also with the best possible terms and price. In order to do that, you have to focus on quality, quantity, price, availability, vendors, service options, and delivery methods.

In other words, your company couldn’t run without you.

And that brings us to our current topic: Efficiency. With all you have on your plate, it’s wise to improve your efficiency so you can become a super star. Here are 7 efficiency practices you can easily apply to your procurement tasks to make them more efficient.

Think Carefully Before Making a Purchase

One of the most desirable traits of any procurement professional is the ability to reduce costs while procuring the items a company needs. However, if you automatically create a purchase order for every request that comes across your desk, you could be unnecessarily spending more money. In fact, according to research conducted by the CAPS Research, for every Rs.60/- you spend on supply management gives you an estimated return of Rs.500/- . That means when you take the time to identify, research, acquire, and manage the products and services your company relies on, you’ll substantially reduce your expenses. For example, if you have a running order for copier paper from multiple departments, why not check to see if it’s being stockpiled because those departments have begun storing their documents in the cloud?

Build Virtuous Supplier Relationships

A procurement professional without a group of qualified, happy suppliers is just spinning his wheels. Sure, you can put out a bid request to new vendors every time you need a product or service, but you’ll spend an inordinate amount of time on those bids. By starting from scratch every time you issue a bid request, you’ll have to research each new supplier, learn their industry position, and identify their negotiation tactics.

A better method is to develop good working relationships with a select group of suppliers you can trust. This will not only help you streamline the procurement process and become more efficient at your job, but a happy supplier will likely tell others about how good you are to work with, and that may lead to new sourcing avenues.

So, how do you build good supplier relationships and make them happy? Start by being fair with them in all your business dealings. That includes putting out detailed and straightforward RFQs, and then negotiating fairly with the vendors you choose. Ensure your vendors are paid on time, and that they know you appreciate their professionalism and skills.

Don’t be an Island

While it may be tempting to do the job on your own terms, it’s not the most efficient way to handle things. Instead, if you invite stakeholders from various departments to give you input about their needs and the vendors they want to use, it will go a long way in helping you efficiently accomplish your goals and complete your projects. For example, if you insist on using a supplier, but the department head doesn’t like that supplier’s quality of product, the strength of your project will be weakened. But, if you allow the department head to provide input about positive past experiences with other vendors and you remain open to working with them, he will view you as a team member, and probably help push the project through to completion.

Use Your Analytical Skills to Make the Right Decisions

If you’re in procurement, it’s a safe bet that you’ve got some killer analytical skills. After all, if you’re responsible for planning and executing projects, vetting multiple vendors, analyzing bids and negotiating the best possible deals, you’ve got a good head on your shoulders. In order to use those analytical skills to improve your efficiency, you’ll need to apply them to more than one area of the process. For instance, you’ll need to have a thorough understanding of all types of quantitative data in order to make the best financial decisions for your company. And when a project is over budget or running behind schedule, you’ll need to put those analytical skills to use to come up with creative ways to get it back on track. In other words, successful procurement professionals use the skills they naturally have in order to make them even better at their jobs.

Sharpen Your Negotiating Skills

In many lines of business a good negotiator is one who drives a hard bargain and shows little mercy for the opponent, but procurement professionals don’t have that option because they have to develop good relationships with their opponents in order to build a reputation so other vendors will want to work with them. That means you must walk a fine line. You obviously want to make the best deal for your company, but at the same time, you don’t want to alienate suppliers during the negotiation process.

In order to develop the right negotiation skills, you will have to develop strategies and well-honed practices that accomplish both of these goals. You can ask your company to pay for training or do a little self-training to better your skills.

Think Globally

In today’s world of procurement, professionals have to look beyond their borders in order to secure the best deal for their business. Most likely, your need for products are more complex than they were few years ago, and you have to look to global supply chains in order to fill the needs. That means you’ll need to think globally by developing flexible options and logistic arrangements. This is another area where your analytical skills will come into play.

Move Forward with Technology

If you’re still shuffling paper contracts back and forth between parties, you haven’t kept up with the times—a key attribute for successful procurement professionals. Today’s savvy professionals take their contracts to the cloud to make the process more efficient. With an automated contract management system in place, you’ll drastically increase your efficiency by being able to create drafts online, negotiate in real time, utilize e-signatures to speed up the signing process, and set compliance reminders so you can stay on top of everyone’s commitments.

Chances are, you already have all of these necessary skills, and you might actually be few steps away from becoming a procurement super star. Make a list of the traits mentioned above where you feel you could improve, prioritize them, and gradually work on them. Take the time to sit down at the end of each week to see how well you did in each area, and then determine what should be your next goal to becoming a procurement super star.