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5 Smart Procurement Strategies to Help You Crush Your Competition

B2B Trends Procurement Start-up Business

Procurement touches every area of your organization.

The knowledge, expertise and information that exists within this department is enough to give you a significant competitive advantage your competitors can only dream about overcoming.

However, using your procurement department strategically will require some investment and focus. The ideas below will help you get ahead of your closest competitors by unleashing your organization’s secret weapon – an amazing procurement department.

1. Procurement as a Profit Center

Cost Center Profit Center

Companies are becoming more and more hungry for data. They recognize the value that data will bring to their businesses and how data can alter their operations for the better.

Plenty of other companies also know data is valuable. Because of this, data can be sold for a tidy profit.

Specifically, you can aggregate all the data you have about your customers, your suppliers and about other trends in the marketplace and sell it to other companies.

That will turn the supply chain and procurement department from a cost center into a profit center.

That fact alone is a game changer, in that it will allow your department to have funds to continue to invest in improvements to manage your supply chain better and, as a result, advance your organization.

2. Customer Service Over Cost of Suppliers Alone

Procurement departments often get a bad reputation as only being concerned with bottom line and sourcing materials at the lowest price possible.

However, cost isn’t always the most important factor when it comes to selecting the best vendor to give you the materials you need.

Service is becoming increasingly important, and in some instances is dethroning cost as the final factor in supplier selection.

As a result, smart companies are finding a way to evaluate customer service, as a key component of vendor selection. No longer are they willing to accept sketchy service in favor of bargain basement prices.

Think about how much time and energy your team could save if you only dealt with suppliers with excellent, proactive customer service. Think about what your team could accomplish with that lost time.

3. Procurement of Services

Procurement of Services

When most people think procurement, their minds immediately go to the process of sourcing raw materials and physical goods. And while this is true for many companies, more businesses are starting to embrace procurement departments helping them source services as well.

This is becoming increasingly important as more businesses outsource large-scale tasks that are mission critical to the business, but not a source of competitive advantage.

For example, many companies are starting to outsource HR and accounting functions to businesses that specialize in these areas.

The procurement can provide their expertise on selecting vendors to help make the right choices for these outsourced roles.

4. Digital Processes

Systems and processes help businesses operate more efficiently and effectively. Because they make such a dramatic impact, it’s just silly to not use them for repetitive tasks.

However, even when established processes are in place, there’s always opportunity for human error. Handling these repetitive processes with technology is a wise choice.

For example, instead of having a person manage the RFP process, you can implement a system to do that for you. Now, this isn’t to say that you should run out and replace all the humans in your department with machines.

Digital processes can take over the rote, routine work, and allow your staff to spend more time creatively solving difficult problems that machines aren’t able to handle – such as choosing what suppliers to work with.

5. Globalization

Globalization

For many years, a company could call themselves global if they had operations in maybe one, two or three countries.

As it became the norm to work with suppliers and open new offices in different hubs around the world, companies started to shift to a more international focus.

Even though procurement departments often worked with suppliers from countries all around the globe, their headquarters would be centrally located in one market.

Those days are fast going away.

The leading procurement departments are learning that the closer they are to their suppliers and the markets they are serving, the better.

Companies that are leaving their competitors in the dust are putting people on the ground in the local markets so they’re able to see and experience firsthand what’s needed.

By doing this, they’re able to help the markets solve problems and run efficiently both on a local and global level.

It’s Time to Get Smart About Procurement

There are a number of ways you can invest in smart procurement approaches that will propel your business forward.

Explore one or more of the five options above. Choose one, implement it, and then when positive results start rolling in, start investing in another.

Your marketplace isn’t going to become any less competitive, so it’s time to pull out all the stops in order to stand out.

 

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