Building a Procurement Function From Scratch
With the right approach, building a procurement function from scratch can create streamlined and efficient processes that deliver real value to your organization.
By Hugo Britt | May 11, 2023
Whether you’re building a new house, moving to a new city, or learning a new skill, starting from scratch can be a daunting task. It takes a clear plan, a willingness to learn, and the ability to adapt to new challenges and opportunities.
Building a procurement function from scratch (otherwise known as “greenfield procurement”) is one of those tasks that can seem overwhelming. However, with the right approach and a clear plan, building a sparkly new procurement function can be an exciting opportunity to create a streamlined, efficient process that delivers real value to your organization.
Steps for building procurement from scratch
Imagine that you’ve just landed a new job as the head of procurement for a growing company. The company has never had a dedicated procurement function before, so you’ve been granted a blank slate to work with. You know that building a procurement function is critical to the success of the business, but you’re not sure where to start.
If done carefully, practitioners who've been tasked with creating a procurement function have the opportunity to make a critical and valuable impact on the organization.
Define your goals and objectives
The first step in building a procurement function from scratch is to define your goals and objectives. What do you want to achieve? What are your priorities? What are the challenges that you need to overcome? Defining your goals and objectives will help you create a roadmap for building your procurement function.
Here’s the good news – achieving success is comparatively easy in greenfield procurement because there’s so much low-hanging fruit available. You will be able to quickly implement changes that lead to immediate cost savings like consolidating spend, negotiating better payment terms, or implementing cost controls. At the other end of the curve, managers of highly mature procurement functions have to work much harder to get access to increasingly out-of-reach fruit.
Map your stakeholders and understand their needs
Next, you need to identify the key stakeholders in your organization. Who are the decision-makers? Who are the end-users? Who are the key suppliers?
The better you know your stakeholders, the better you will be able to understand their challenges and anticipate their needs; leading to a procurement function that comes up with proactive initiatives rather than reactive solutions.
Build a team
Once you’ve identified your goals and stakeholders, it’s time to start building your team. It’s entirely possible to run a one-person procurement function (at first) with the help of technology and process outsourcing, but as the business scales up you’ll need to hire people with the right skills and experience. Look for individuals who are analytical, detail-oriented, and have excellent communication skills. Building a strong team is critical to the success of your procurement function.
Establish policies and procedures
As you start to build your procurement function, you’ll need to establish policies and procedures that govern your procurement process. This includes everything from identifying suppliers to negotiating contracts to managing supplier relationships. You’ll need to create a framework that ensures consistency, transparency, and compliance with regulations and laws.
Build your tech stack
One of the most critical components of building a procurement function from scratch is selecting the right tools and technology. There are many procurement software solutions available, so it’s essential to first define your specific needs. Look for solutions that streamline your procurement process, improve visibility, and enhance collaboration.
Your organization may already have an end-to-end ERP that includes a procurement module, and you may be expected to use that for ROI reasons. Alternatively, you may choose to build your own tech stack with integrated best-in-class solutions for different procurement needs.
Building a procurement function from scratch can be a challenging task, but it's also an exciting opportunity to create a process that delivers real value to your organization.
Join a group purchasing organization
Engaging with a group purchasing organization (GPO) should be one of the first things you do when building a procurement function from scratch. A GPO can help you leverage their awesome purchasing power to access otherwise out-of-reach discounts with suppliers. Acting as an extension to your growing team, a GPO like Una can also provide access to a network of suppliers, industry experts, and other resources that can help you build your procurement function more quickly and efficiently.
Building a procurement function from scratch can be a challenging task, but it’s also an exciting opportunity to create a process that delivers real value to your organization. By defining your goals, identifying stakeholders, building a strong team, establishing policies and procedures, selecting the right tools and technology, and engaging with a GPO, you can create a procurement function that drives success and growth for your business.
Move faster, save more, and look better doing it. Join Una now or book a no-obligation discovery call to learn how group purchasing can work for you.