There are 16 pieces on a chess board. To get across the board in victory, you must utilize all the pieces in one cohesive strategy. You wouldn’t approach a match with only one chess piece and no plan, so why would you approach your corporate purchasing with one piece of the procurement process?
Procurement and purchasing are often used interchangeably, but their role in business have separate definitions and outcomes. Before you can identify the state of your internal procurement, there needs to be a clear distinction between purchasing and procurement.
Anyone can exchange money for goods, that is, anyone can execute purchasing. But procurement involves a great deal of strategy, research, negotiation, as well as purchasing to ensure your company is running efficiently and cost-effectively. Procurement’s role is acquiring all of the goods and services that are vital for your business to function and thrive.
Essentially, purchasing is just one piece in the procurement game. To have a winning strategy, you need to have all the components of the procurement process in play. So how do you know if your business has a reliable procurement process versus just a purchasing plan? Here are a few questions to hold up to your company’s spend:
1. Do you have a concrete strategy?
If you do: You are one step closer to having a solid procurement process.
If you don’t: Don’t panic, it is never too late to gather your procurement team and formulate a winning strategy. While developing and implementing this plan may take an initial investment of time, it will generate money and time in the long run.
To create a winning procurement strategy, start with these four categories and flesh out according to your company’s goals:
1. Imagine your ideal future
Where do you want your company to be in a year, five years, or ten years down the road? How can you implement a thrifty procurement plan that will help you get to that goal?
2. Organize spending priorities
Take a look at what you are currently spending and prioritize based off the goals set step one.
3. Create obtainable objectives
Goal setting is important, but quantifying those goals with measurable objectives will be the key to success for your procurement strategy. Sit down with your team and tag your goals with key performance indicators and purpose for each actionable step.
4. Formulate and document strategy
Once steps one through three are complete, document and implement your procurement strategy. Don’t forget to monitor those objectives!
2. Do you know your Procurement-to-Pay cycle?
If you don’t: Your Procurement-to-Pay cycle will be different that any other company’s, so take the time to establish the key components.
- What are the steps that your company needs to take from beginning to end in the procurement cycle?
- What is your primary purchasing requirement, are they re-occurring or are you accounting for off-the-cuff expenses?
- Who handles the authorization and finalization process of buying?
- Is there someone identified to follow up and maintain vendor relationships?
- How are your invoices processed and stored?
To learn more about the Procurement-to-Pay cycle, read this article from our friends at Procurify.
If you do: You are one step away from having a solid procurement process.
3. Do you have a procurement team?
If you don’t: Not every company has a procurement department, but that does not mean every company should not have a procurement process. If you do not have all the resources to form an extensive procurement department, fear not. There is a partner with the expertise you need that can offer their services at no additional cost to your company.
Partnering with a group purchasing organization (GPO) will ally you with a team of experts that know the procurement process well, and that will dedicate their experience in several different kinds of business to helping your company fire on all cylinders. By partnering with a GPO like UNA Purchasing Solutions, you are ensuring not only an average of 22% off your purchasing needs, but you are also gaining a procurement partner in the process. There is no fee or commitment necessary to become a member and sign up only takes minutes.
If you did have each of these questions covered within your company, chances are you have a solid procurement process in play. Congratulations! If you did not, as is the case with most companies, let UNA Purchasing Solutions be an extension of your procurement team today and get that winning strategy in play!