AS A C SUITE (CEO, CFO, COO etc.) OFFICER, WHAT IS YOUR PERCEPTION OF YOUR PROCUREMENT FUNCTION?
“I have always wondered why someone should spend 3 to 4 years studying how to get three quotations, up until you joined us”
This was a statement of a Former Finance Manager of one of the leading financial institutions in Zambia to the author of this article.
Well, he may not be the only one who wonders or thinks in this manner. At least for him, he was able to witness the transformative power of strategic and professional procurement first hand, hence, his statement ending with the phrase, “until you joined us”. What did he witness?
He witnessed some of the following critical principles of procurement at play (People, Power, Proposal Processes, Planning, Project Management) in a manner that supports the overall corporate agenda.
People; He noticed that the team was exhibiting a different skill set and competencies that the organization had not experience in the past. Such skill sets were manifest partly due to how the new Senior management team had come to perceive the procurement function. After a spirited fight and contribution by the procurement team, the new CEO and her senior management recognized and respected the procurement function as a critical tool for enhancing overall corporate objective. Recognition and respect of the members of procurement contributed in providing the efficiency and effectiveness of procurement operations and its impact on the organization.
Proposals-These are important primary documents of procurement that ensure vendors’ responses meet the organization’s needs, legal obligations are met, transparence and fairness is upheld and value for money is achieved in the procurement process. The preparation of these documents involves inputs from different Subject Matter Experts (SMEs) within and outside the organization. The perception held by such SMEs or indeed the CEO will easily manifest itself in the quality of the proposals prepared. Where the perception is high, SMEs and senior staff (as opposed to seconding junior staff) will find time to engage or respond to input requests from procurement
Power- Effective CEOs leverage the full power of the people they lead, who include people in the procurement team. Empowering your procurement teams refers to the authority and influence afforded to them to influence decision making, processes and procedures based on experience and communication of specialized knowledge (the power of expertise). The extent to which CEOs empower their procurement teams is greatly influenced by their perception of the function. Those with a high perception of the procurement function will effectively leverage the full power of procurement for the greater good of their organizations.
Processes– Empowered team will be in position to develop and streamline procurement processes, identifying bottlenecks, improving workflows, and contribute to the overall efficiency and effectiveness of the organization.
Planning – Empowered team will also ensure smoother operations and that there are no surprises down the line through effective focus and planning of all procurement activities.
Project management (Prevention)- project; Project Management includes tracking key performance indicators (KPIs) such as savings achieved, purchase order cycle time, supplier performance, and contract compliance and help measure the effectiveness of the procurement process. The CEO perspective of procurement influences what metrics gets measured, which in turn help identify areas for improvement and drive overall organizational success.
Project management is essential in procurement to mitigate cost, quality, delivery, and supplier performance risks. By assessing risks related to supplier capabilities, contracts, and market fluctuations, procurement helps make informed decisions and ensure that procured items are delivered on time, to specifications and with minimal disruption.
CONCLUSION
Procurement is a critical aspect of any business operation, which is often overlooked or undervalued. It is a function that is critical as it controls Total Cost of Ownership (looking at more than just the purchase price, but looking at all costs from acquisition to disposal), quality of goods and services acquired, supplier relationship and project management required for successful business operation and continuity. To benefit from an effective procurement management, the perception of the function is key as it determines the extent to which the function is resourced. With the right perspective, your procurement will evolve into a lever for securing competitive advantage.
Those who understand this important aspect will lip the full benefit of a professional and effective procurement function and improve their company’s bottom line.
Contact us today on +260 966 754905, +260 953 830 113 or email us on info@otiersolutions.com to find out how Otier Business Solution (OBS) can help take your procurement to another level.
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