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Strategic Procurement in Your Organization

If you are a professional working within a company’s procurement department or are an individual who is tasked with procurement for a smaller business, it is smart to find ways to maximize your time and how to best put your resources and your people to work.  That is where strategic procurement comes into play.  To begin thinking about strategic procurement and how it can be put to use in the most effective way within your specific company or organization, we must first define exactly what strategic procurement is, how it works and why it can be such a great benefit to your business.

What Is Strategic Procurement?

First off, let us define what a strategic plan is.  It is a plan that is crafted with the aim of eventually achieving goals that may be quite far off in the distance, such as five or ten years into the future.  A strategic procurement strategy does not simply involve coming up with short term solutions, but rather involves coming up with strategies that will work in the long term.  Strategic procurement plans are generally created by top level management within a company or within a company’s procurement department.  A strategic procurement plan will also have an influence on the way that tactical procurement plans are developed and implemented.  A strategic procurement plan is a comprehensive plan that takes into account the stated goals and needs of the procurement department and of the company as a whole and then works in a targeted manner to achieve them, over time.

How Can You Decide If Strategic Procurement Is Right For You?

The first thing you must do is consider the long-term goals you have set for yourself, your department and/or your company as a whole.  Perhaps you wish to upgrade your software so that you can use the very latest in procurement technology.  Perhaps you wish to get your entire team certified.  Perhaps you wish to prove your team members with additional training or continuing education so that they can all become high performers and valuable members of your team.  Perhaps you wish to strength the relationship between your procurement department and the various other departments within your company.  All of these desires can be written into a strategic plan.  If you have only been thinking about these goals, chances are you aren’t any closer to achieving them than you were when you first conceived the idea.  Strategic procurement involves setting a plan so that you hold yourself and your department responsible for achieving your goals.

You should also recognize that strategic plans on their own may not be enough to turn your department around and get the wheels turning so to speak.  Do not think of strategic procurement as an island, it is really more of a peninsula and it is connected to tactical procurement.  Next week’s article will explain what tactical procurement is and how it works hand in hand with strategic procurement to help you and your procurement department to get that much closer to achieving your long term goals.

September 27, 2012
BY Bellwether
Is Your Purchasing Job Boring?

On the surface, the job of procurement has no great appeal to it, it sounds boring and mundane.  There is a particular motion or routine to it that sometimes even the best procurement manager can find that they fall into a rut and just going through the motions of the job, purchasing month after month.  Does this really add any sort of value to you or your company though?  Just simply running through the motions is draining.  We’ll talk about that in a moment however, the short answer is, no.

It is important to challenge yourself as a procurement manager to be proactive!  Michelle Mone, co-owner of MJM International really brings the entire thought into full light, she said “As the world changes the business has to change with it and not be afraid to do so.  Be proactive, bring ideas to the table and don’t just do the same mundane things every month.  Think of new opportunities or places the business hasn’t gone before.  Be creative – that’s what chairmen and chief executives look for.”      

The More Unique You Make Your Role, the More Valuable You Will Be

Creativity is but one of many things that a procurement manager must be. Creativity requires you to have talent, a lot of determination, perseverance; you have to know how to trust, learn, focus, have integrity, be willing to sacrifice, and you have to be ready for hard work. 

For just a moment think about procurement not so much as dull, but more as a forefront of business development.  After all, procurement helps to;

  • Reduce your businesses overhead
  • It increases their margins
  • It allows businesses to source for a higher quality product
  • It makes for a higher level of service
  • It heavily increases organizational efficiency

 Imagine now if you are bored at your procurement job or at a standstill perhaps, out of creative ideas.  Is it as simple as going back to all the things that creativity is, looking at what it does on the forefront and then just getting back into the mode?  What can the procurement manager do to bring back that passion?  The answer to that cannot be a general one; it has to come from each individual person across the board. However, there are a few suggestions that you can do to help motivate you back into the swing of things.

You see, at the heart of any innovative engine is creativity and passion.  They are the key elements and without them, the flow of ideas slows or even sometimes stops all together.  Here are a few things that can help to motivate you and your team if you have one: 

  • Go back to the vision and grasp what it was that you set out to do
  • Have a clear, concise list of goals that are prioritized, both strategically and tactically detailed
  • Set a timeline for each goal and make sure it fits into the overall vision
  • Set regular meetings or some semblance of communication so everyone always knows that is going on and maybe even open it up to others for ideas
  • Have the end result of the success for the project
  • If you are working with a team, allow them to write out the vision to you and let them be the ones to frame the challenge and ideas for consideration
  • Challenge your own or your teams assertion as well as assumptions; encouraging yourself and/or your team to think outside of the box
  • And the biggest one is to go back to your ‘why’.  Without a ‘why’ in a project you will find it very hard to show any kind of creativity or passion, no matter what the job is

How Will You Keep From Getting Bored? 

Every job at some point loses a part of its enjoyment.  Jobs like procurement sometimes have a tough time keeping up having a steady stream of excitement to it.  Purchasing doesn’t have to get boring. Sometimes all it takes is to go back to the beginning of things and remember why you were passionate about it in the first place.  Just like school, in elementary school math was fun but by the time we got to high school you had probably lost a little bit of your passion for it, but you got through it just fine!   

September 25, 2012
BY Bellwether
Certified Procurement Professional Benefit #5 – Industry Recognition for Leaders

Now well shall turn to how senior management perceives you as an individual.  Do they regard you as a leader who is capable of great things and who can lead the organization in a positive direction?  Do they think of you as a groundbreaking individual who knows how to keep the business at the forefront of the procurement industry and that knows the best practices necessary to achieve a high level of success?  Or are you unsure whether or not they trust you?

In today’s world, each and every professional needs to create their own reputation and is responsible for curating their own ‘brand.’  Each professional needs to create their own legacy of accomplishments and claims to fame so that their organization can’t help but recognize their true value as an addition to the organization as a whole.  You should think of getting yourself certified as a means of conducting reputation management, without having to go out and hire a consultant or team of professionals to do it for you. Once you are certified, you have reached a new level in your career and people will definitely respond to the change.  For example, your team members will look up to you when they see that you have become certified and will wish that they also can obtain a certification and thus command respect.

Some procurement leaders have received tremendous publicity and recognition for their endeavors within the field and for getting their entire teams certified.  For example, Palomar Pomerado Health Supply Director Paul Sas and Kimball Procurement International Director of Global Supply Chain Bob Price have both graced the cover of Supply & Demand Chain Executive Magazine as a result of their teams achieving SPSM® Certification.  As you can see, team certification not only boosts the earning potential of a team, it also increases the chance that the team and the leader who is at the head of the team will receive national or international acclaim as a result of the certification endeavors.  If you receive industry recognition that can create more feelings of trust within senior management so that you can be regarded as a valuable and trusted member of the inner team that runs the company.

Yes, it turns out that the mere act of getting each and every member of a procurement team is in and of itself a newsworthy achievement that can lead to public recognition and public acclaim – two things that will definitely help you to advance your own position within your company and in the industry as a whole.  At the end of the day, you are the only one who can be truly responsible for your success in the procurement industry.  By taking the right action right now you can position yourself to be in a better place for advancement and can ensure that you are so indispensable to your team that you can enjoy a level of job security that many people are unable to in these troubling economic times.  What could be better than that?

September 25, 2012
BY Bellwether
Certified Procurement Professional Benefit #4 – Better Relationships With Suppliers

So how can your procurement department save money for the company?  The answer is simple.  Wherever your company is spending money is a potential place where savings can be obtained.  Savings essentially are where the money is and where the money is going.  The money is not primarily going towards paying salaries for your procurement team or even anywhere else within the budget that is allocated towards the procurement department.  Instead, the money that your team can recapture is money that is leaving the company and going to the suppliers.  How you interact with your suppliers is truly going to determine how much you can save on expenditures and how much money can be recaptured and brought back to your organization.

Negotiation is a part of the process for sure.  Being a good negotiator is definitely one way to drive costs down so that your organization can save money on expenditures.  But negotiation is not the only way.  You can also collaborate with your suppliers.  If you are able to communicate effectively with suppliers to find ways that you can both save money, this is what is known as ‘smart procurement.’  Whether you are negotiating or working together with your supplier to come up with ways that you can save money together, things run much more smoothly when you have the respect of the supplier.  You need to first ensure that you are dealing with the right person within the supply company to establish that they are someone who has the necessary authority to make the cost-cutting decisions that you are discussing.

Imagine that you are the representative of the supply company.  If you had to choose to put your trust in either a non-certified procurement representative or a procurement profession with a certification, who would you trust more?  Most likely you’d be more apt to think of the certified procurement representative as the more qualified individual.  On top of that, if the supply company knows you are sending a certified procurement representative, they will be more likely to send one of their key decision-makers to the negotiations enabling you to form better relationships with supply companies.  As you can see, a procurement certification truly is the recipe for success in this industry.

Certifications are also an excellent credential when dealing with international transactions.  If you select a globally recognized certification you can get a great deal of leverage from it that will lend itself not only to dealings with national organizations but also to dealings with organizations from elsewhere in the world.  You can also obtain certifications for certain countries that you will be dealing with in anticipation of negotiations to put yourself in a better position to come out with a great bargain. The bottom line is that whatever investment is necessary to obtain certification it is definitely worth the expense.  One way to go about obtaining a certification is to approach a superior at your company and ask for the company to sponsor you and your team so that you may become certified.  If you want to really make an impact, you can always go out and pursue a certification on your own.  Just think of how much of a commitment to success that shows!

September 20, 2012
BY Bellwether
Certified Procurement Professional Benefit #3 – A Stronger, More Effective Team

Procurement team certification can also help to make your procurement team stronger and more formidable.  The stronger the team is, the better your overall results will be and the more respected your department will be within the company as a whole.  One thing about continuing education for professionals in the workplace is that it makes the members of a team feel that they are valuable additions to the whole and that the team is stronger because of their enhanced education.  Continuing education efforts such as procurement certifications are an investment in your people.  If your company invests in goods, services, materials and more, why shouldn’t they also invest in your team?

There are many different terms that are used within the procurement profession in many different ways.  This can be very confusing, as many of these terms may be used interchangeably.  In addition, some organizations interpret the meanings of certain terms in different ways.  Some employers establish their own set of lingo and terms for procurement and do not use the standard usage for terms.  Within one single organization, there may be different employees who are using the same term to describe different things and different employees who are using different terms to describe the same thing.

On top of that, there may be conflicting approaches to the way certain issues should be handled or to the ways that certain concepts should be implemented.  Procurement certification can help to establish consistency within your organization so that everyone is truly on the same page.  Every real business leaders wishes that their team can be “speaking the same language” so that they can work effectively and efficiently towards a stated common goal.  If you can’t even decide which terms should be used to describe things, how can you ever hope to have consistency as to how the terms are executed within your workplace as a whole?

The opportunity to certify your procurement team can help to truly unify your team.  When your team participates in continuing education together everyone can be brought up to speed so that terminologies and strategies can be standardized across the board to all members of the procurement team.  That way no one can fight about who is doing things the right way, as everyone will know exactly what the right way is rather than doing things their own way and assuming that they are the one who has it right while everyone else is behaving improperly.

A team atmosphere is important in a team.  Your team needs to work together so that you all can shine, rather than working separately in order to stand out from the pack.  Certifying the entire procurement team will put everyone on the same page once again.  With a team atmosphere you can achieve much more positive results overall so that the entire team is lauded for your achievements as a group.  The rest of the company will definitely take notice and do not be surprised if you see more camaraderie within the entire organization as a whole as a result of your improved teamwork and efficiency.

September 18, 2012
BY Bellwether
Certified Procurement Professional Benefit #2 – Better Return on Investments

Another benefit of obtaining procurement certification for your team is a better return on investments.  Oftentimes the higher-ups within a company evaluate the success of their procurement department in terms of the perceived return on investment.  That means that your team is lauded if you can garner excellent returns on investments made and that your team may be chastised if that is not the case.  If you are curious, a return on investment for a procurement department is basically calculated like this: for each dollar that is spent within the budget that is allocated to the procurement team for qualified expenses such as benefits, salaries, equipment, software, facilities, technologies and more, how much money is then returned to the company via a cost savings, additional funds or revenue gained?

Taking that into account, you need to ask yourself “how can my team work to save money in order to achieve better return on investments?”  The answer is as simple as it is complicated: with many different tactics, strategies and techniques.  In order to successfully conceive, develop and implement these specific tactics, strategies and techniques you need to ensure that all of the members of your team are well educated and that they actually know how to do their jobs properly.  So how do you make sure that your team really does know how to do their jobs properly?  That is where procurement certification comes into play.

Procurement professionals that hold procurement certifications are well trained to do their jobs more than adequately and it shows in the work product that they produce and the results that they achieve.  The return on investment for such individuals is sure to be higher than the return on investment for procurement professionals who are uncertified. Certified procurement professionals are better able to establish ways to cut costs annually.

As a leader in your procurement department, you can get the members of senior management to trust your skills, your expertise and your ability to perform even under high pressure situations.  You need the members of senior management to trust your decisions when you request that they invest capital towards your department for new personnel, new technology, new software or other important resources that can help your department to operate more smoothly.  If your team is saving the company money, you will have a much better chance of having your funding requests approved in the future.

The phrase ‘return on investment’ can be your friend rather than your enemy.  Position yourself and your procurement team so that whenever you hear those words it will be to describe something positive that your team has achieved.  At the end of the day, a certified procurement team is better trained and better qualified to come up with ways that your company can save money.  When you save your company money, your company recognizes the true value of your procurement department and good things flow your way.  In other words, you can’t afford not to get your procurement team certified.

September 13, 2012
BY Bellwether
Certified Procurement Professional Benefit #1 – Enhanced Perception

You have likely heard the saying “perception is reality” before.  For leaders within procurement positions, this essentially means that if those at the top of the management chain believe your procurement team to be incompetent, inexperienced or incapable; your team is no better off than if they actually were guilty of all these things.  So how can you show top management that your team is solid and capable?  That is where procurement team certification comes into play.

If the senior management at your organization already hold very high esteem for your procurement team, that’s great.  But do you know what they really think?  Perhaps they think that your team is not filled with the ‘brightest light bulbs in the box.’  Maybe they simply do not know how to gauge whether or not your team is capable or if the team is well below average.

If you obtain a procurement certification it shows your organization that a third-party has assessed your team’s capabilities and has elected that you meet the designated standards for excellence.  With this third-party validation, you do not have to fear that your claims of excellence will fall on deaf ears.  This will mean that you no longer have to get into a discussion with senior management regarding whether or not your procurement team is truly capable of doing their job properly.

Internal customers also are important to consider.  How do they perceive the skills of your procurement team?  They demand that your procurement department services are easy to use and responsive to their needs.  When you decide that you are ready to transform your procurement team into a better and more streamlined working group, you need to ensure that the entire organization is on board and ready to comply with the new directives set forth by the procurement department.

Once your team has a certification, they are truly professionals in the procurement field and will be perceived as qualified team members who are well trained for and capable of success within your procurement department.  Just think about it.  The professionals within other departments of your company have professional certifications, don’t they?  You likely work in conjunction with CPAs (Certified Public Accountants), CQA (Certified Quality Auditors) and PEs (Professional Engineers).  While their skills are certainly a big part of their benefit to the organization and their perceived benefit to the organization, the certification on its own commands a certain degree of respect.

A team is only as strong as its weakest link.  You need to show everyone else in the company that the weakest link is definitely not the procurement team.  Procurement team certification enables your procurement team to show your entire company that each member of the team is truly committed to excellence and that you are ready to assist members of any department within the organization with their procurement needs.  Certifying your procurement team is a wonderful way to create a positive image for your team so that you command respect from everyone in the company, including those who are at the top of the food chain.

September 11, 2012
BY Bellwether
Learn How Insurance Companies Can Benefit Greatly from Purchasing in the Cloud? (Part Two)

Purchasing in the cloud is becoming more and more popular among insurance companies these days.  If your insurance company is not yet using cloud-based purchasing software, you are missing out on a great way to save money and increase productivity.  We previously explored how purchasing in the cloud can be used for insurance companies to streamline operations and some of the reasons why insurance companies may not be using this amazing tool already.  In this installment we will take a closer look at procure to pay software in the cloud: how it works and why it is such a wise investment for any insurance company business, small or large.

How Does Purchasing in the Cloud Work?

If your insurance company is currently using purchasing software, you may not realize that upgrading to software in the cloud can save you a great deal of time and money.  First off, if you are using purchasing software right now it is likely installed on your company’s servers.  This means that you need to perform basic maintenance on it such as installing new updates and upgrades.  You will also need to enlist the assistance of an in-house or external IT consultant for help with troubleshooting should anything go wrong.  In addition, you need to have someone entering all of the necessary data.  You are entrusting that individual or team of individual with all of your most essential inventory needs and even the most mundane and if they make mistakes the entire company may suffer.

In contrast, purchasing software in the cloud is not installed on your company server.  It is maintained in the cloud, and all maintenance, installation and updates are taken care of by the company providing the service.  You do not need to worry about troubleshooting any issues, as all of that is handled externally. All of your needs are inputted into the server so that items are ordered whenever they are needed.  Inventory can be tracked seamlessly and helpful metrics are available for your perusal so that you can work to further cut costs by observing purchasing trends and so that you can easily change specs as needed.  With the addition of procurement to pay at your insurance company things will run much more smoothly and productivity will definitely see a marked increase.

If you are the owner or operator of an insurance company and you have not yet upgraded to purchasing to pay software, now is the time.  If you are not the owner but are an individual who works in middle management at an insurance company, this is a great idea to bring to your superiors that will definitely help them to see what a valuable asset you are to the team.  Cloud-based procurement to pay software is the wave of the future and the sooner your business gets on board the better.  If you are seeking ways to bring down costs at your insurance company while streamlining your purchasing policies and procedures, you owe it to yourself to examine your options for purchasing software in the cloud today.

September 6, 2012
BY Bellwether
Learn How Insurance Companies Can Benefit Greatly from Purchasing in the Cloud (Part One)

While it cannot be denied that most industries across the board have felt some repercussion as a result of these troubling economic times, insurance companies are surviving.  That is because everyone needs insurance, despite the economic situation.  Drivers must of course retain proper insurance for their vehicles or they are subject to serious fines and penalties, and even the suspension or revocation of their driver’s license for repeatedly driving without a license.  Health insurance is important for all, for in the event of a medical emergency or a diagnosis of a life-threatening or terminal illness, if an individual is uninsured things may go quite poorly indeed.  Health, dental and eye coverage are a must and thus there is a need for high quality insurance companies to fulfill it.  But just like any other type of company, insurance companies need to save money where they can in order to continue to see steady or rising profit margins.  That is where purchasing in the cloud comes into play.  The following information will explore how insurance companies can benefit greatly from purchase to pay services in the cloud.

Streamline Business Operations With Purchase-to-Pay Services For Insurance Companies

One great thing about procurement to pay services in the cloud is that they truly do streamline business operations for an insurance company.  For example, if supplies such as forms, printer paper, ink or any other vital tools run low, an alert is automatically sent via the cloud based purchasing software so items that are needed flow into the business seamlessly.  This eliminates the need for a dedicated individual to take care of ordering such supplies, and also takes the burden off of support staff who might otherwise be delegated that duty.

If Purchase to Pay Software is So Effective Why Isn’t Every Insurance Company Using It?

A lot of insurance companies are looking for ways to streamline operations in order to save themselves both time and money.  So if purchase to pay software is so effective at achieving this goal, why isn’t every insurance company using it?  To answer this question, one simply must look at the structure of insurance companies.  In smaller insurance companies the staff and professionals may be stretched so thin that they simply do not have the time to spend on time-saving measures, as ironic as that is.  In larger insurance companies, there is often a disconnect between the individuals who make purchasing decisions and those who make decisions regarding policies and procedures. 

Many a savvy business owner who worked their way up to the top may rely on others to keep abreast of the newest technological innovations.  That means that if the person in charge of that task doesn’t know about services in the cloud (which they may not if the company does.  Another way of answering the above question is that many insurance companies that are not using purchase to pay software are not doing so because they have never considered it before.  In fact, many a business owner may not even know that procure to pay software is available in the cloud.  Even If they are aware of such products, insurance company owners may not realize that the insurance industry is one that can truly benefit from utilizing cloud-based procurement software.

September 4, 2012
BY Bellwether

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