What is professional procurement?

Procurement, once considered a low level contributor/back office function, has now established itself with an important strategic role to play in leading organizations, with the support and collaboration of senior executive management. Procurement and its scope was simply thought of as buying of goods and services for the running of a business, but today it is has gained a new level of respect and is now formally recognised as a business discipline in its own right.

While professional procurement, in its most basic form, is the sourcing and supply of goods and services from third parties and then the ongoing management of those third parties, there is a lot more to procurement management than the title gives away. Procurement requires professionals to scan and know the industry, the markets, the suppliers (not only the incumbents) and work up and down the supply chain on both the buyer and supply sides"including those that supply to your suppliers. Importantly, procurement is relied upon to manage the supply and the supplier risks, and deliver strategy to mitigate these.

Working in the area of professional procurement requires a solid understanding of the commercial world and also have a deep routed understanding of business and operational needs confronting the internal clients in the business, both now and in the future. Hence the procurement professional must ensure that all critical purchasing decisions are in accordance to the business needs for today and they align with the business goals and forward strategy.

Two crucial and often undervalued competencies that a Professional Procurement Manager requires are a) strong relationship management and b) communications skills; which will serve them well throughout the various internal and external negotiations, issues and management discussions they are required to perform across various levels of stakeholder. In fact, there is an overwhelming agreement amongst procurement professionals that being able to effectively negotiate and deliver procurement arrangements that provide benefit to all parties requires a wider range of skills than many other professions.

Professional procurement is a field which has only truly emerged over the last decade or so and is finally being given the attention it deserves as a key business function that can drive efficiency gains and increased business effectiveness, management of spend and deliver savings that provide a multiplier effect to bottom line profitability.

The benefits of professional procurement and developing an effective procurement process

Professional procurement plays a key role in every business and has absolute potential to improve business operational efficiency, realise cost savings and ultimately deliver increased returns to shareholders. Aligning procurements goals with the corporate strategy produces a number of standout benefits, including:

-Professional procurement provides strategy, process, knowledge and visibility across your purchasing spend.
-Well executed procurement programs do deliver cost savings that go straight to bottom line profitability improvement.
-Professional procurement delivers on the opportunities that you have been entitled to, but until now have not been achieving.
-Individual market and category strategies for both short and long term needs.
-Achieves greater security of supply by lowering risks along the supply chain.
-Drivers service levels, KPI improvement and compliance.
-Professional procurement has a wide focus on improvement levers across price, process and demand management, -not only price.
-Enables the business units to concentrate on their own "core business" activities.

Understanding procurement management and how to initiate a procurement process is paramount

The keys to establishing a procurement capability and process are:

-Support and collaboration from senior executive and finance management,
-Clear policy,
-Right structure with authority, and
-Appropriate tools and techniques (process).

The ability to weld these together and overcome the challenges to deliver will always be dependent upon the experienced, capable and motivation of your resources.

There are a number of ways of beginning the procurement management process. However the decision on how you do this may be driven by some of the common challenges of "show me that there is opportunity here prior to committing all resources needed", "resources are to be funded from savings" or "you need to establish this, but do not know where to start". If you do not have extensive experience in procurement then it is well worth considering a person or organisation skilled in offering procurement management services. The benefit of using a professional who already has experience in this area is that you are able to exponentially build on their knowledge, contacts, process and relationships that they already have in place and promptly deliver results from their understanding of the industry and market conditions to attain the results and credibility that is required in the early stages of this program. Whether short term or ongoing engagements, procurement professionals should be delivering multiple returns on investment for their services.

Overall, there are many advantages to be gained by engaging true procurement professionals for your business"the internal challenge is "determining how serious your organization is about procurement"