Purchasing used to be the preferred term to refer to the process or department that handles a company’s supply chain. Each organization has a team that ensures that every material, supply, equipment, and services-from paper clips to flat-screen TVs to commercial cleaning supplies that are needed to run the business are available on time for employees to use to ensure delivery of products and services to end customers. In the 1960s, you have titles on business cards that read “Purchasing Manager.” Today, companies have Chief Procurement Officers (CPOs), and they typically form part of the executive leadership team that drives the corporate engine.
A faulty and inefficient procurement process can be disastrous to a company’s financial bottom line. The role of CPO is crucial in managing an effective supply chain process for an organization. But creating an efficient procurement process is easier said than done. If you’re a manager or you plan to be a CPO, here are a few ideas you need to bear in mind:
Brief Procurement History
How do you think the pyramids in Egypt were built? Who supplied the stones? You could go as far back as 3000 B.C. to Egypt to trace the history of procurement. Managing the supply of stones and other materials in the slave-driven project that is the Pyramids were assigned to scribes. They recorded the quantities of materials used, on a scroll.
Fast-forward to the Industrial Revolution and a book on railway supplies by Marshall Kirkman referred to a well-organized procurement process as a major factor in the success of the railroad industry. After WWII and through the 1960s, procurement’s role in the organization continued to evolve. Intense competition amongst suppliers in the 1980s drove companies to take a more strategic and deliberate approach in identifying high-quality suppliers. This strategic approach allowed the roles of procurement officials to consider suppliers as long-term business partners.
An Evolving Process
The procurement process continues to evolve. We’ve transitioned from depending on scribes recording information on papyrus to a system of sending messages and recording data using computers. Here are a few more things to note to help you manage your procurement process.
Embrace the digital world.
Purchase requisition, purchase order, and invoice management can be automated using either an off-the-shelf solution or a customized application. Make sure that you invest in the right automation system.
Your supplier and partner.
Are they capable and do they meet specific standards of quality? Can they be depended on to deliver on time? These are the things that you need to ask when doing your due diligence about your suppliers. And procurement leaders must continuously evaluate the supplier landscape to find the best fit and those that can be in a long-term and reliable partnership.
Employees are your customers.
Ultimately, the efficiency and happiness of employees will translate to end-customer satisfaction. Implement ways to make accessing supplies, equipment, or services easy and hassle-free for employees. If they feel like they’re jumping through hoops just to get the toner for the printer replaced, it will likely affect their motivation to work.
This brief backgrounder and key recommendations should get you started in improving your procurement process and becoming an effective procurement manager.