What is procurement?
For businesses of any industry, strategic procurement is essential for ensuring efficient operations and overall profitability. Procurement refers to the process of obtaining needed goods or services from outside providers. Companies often need to contract certain services or buy goods on a relatively large scale. This could include anything from office supplies, furniture, facilities, and heavy equipment to consulting services, testing, and training.
How does procurement work?
Usually, procurement is thought of as the final act of purchasing, but the procurement process comprises several critical steps leading up to the final purchase. First, there is a strategic planning phase, in which businesses and their advisors will need to create detailed lists of what goods and services they need along with a firm budget that supports their financial goals. Then, businesses or their procurement advisors will perform detailed research and compare the advantages and disadvantages of potential suppliers. Finally, once suppliers are narrowed down, proposals are made, negotiations begin, and contracts are signed.
How can procurement grow and strengthen my business?
Procurement is naturally involved with the company’s financial strategy because the price which certain goods and services can be obtained directly determines the company’s profitability. As a result, procurement is closely tied with a business’s overall strategy for success. Strategic management of procurement activities essentially keeps all other business operations running smoothly. Proper management is essential so all company projects can move forward successfully without costly delays or time-consuming errors.
Strategic procurement execution and management optimizes business operations, adds value to the business, and opens new opportunities to unlock profit. Effective procurement management reduces business costs by acquiring supplies, services, or goods at the best possible prices. Businesses will also immediately benefit from greater efficiency as goods and services are delivered on time to keep other operations and projects moving forward according to schedule. In addition, with proper procurement management, businesses will be able to weed out any unreliable vendors, replace them suppliers that consistently perform, and utilize supplier discounts to their advantage.
An effective procurement process also opens the doors to innovation and opportunity. Businesses can get ahead of their competition and hone their competitive edge by finding innovative products or services consumers want but other business are not offering, potentially securing better deals with suppliers.
Procurement is no longer just a question of improving business operations but achieving sustainable cost cutbacks that unlock new profits and put the business’s financial strategy into action. A strong procurement strategy and management team sets businesses up for long-term, sustainable success.
Procurement is an incredibly involved process and often requires support from several different areas of a business. For successful and profitable procurement, businesses may need to contract outside support to ensure the best deal and profits for their company.
PEAQ Procurement is a strategic advisory firm focused on helping mid-sized companies grow and perform by delivering value through procurement. Through its name, PEAQ promises Procurement Excellence Achieved Quickly and bringing their clients to the pinnacle, or “peak,” of success through strategic procurement. PEAQ is action-oriented and focused on accelerated savings and results for their clients. They intimately understand what mid-sized companies need at each stage of the procurement process having walked in their clients’ shoes and faced the same challenges.