When it comes time to make purchases and plans for future purchases where does the money come from when the budget is often very tight? By measuring the cost savings when it comes to crucial items for an organization, purchasing managers can demonstrate to the company executives/board and other decision-makers how money can be repurposed through proper spend management.
Imagine the excitement when the purchasing manager reveals that those savings acquired from procurement can now be measured in the form of musical instruments for a music college, quicker renovations for a hotel, and better medical equipment for a hospital. You take procurement savings and essentially convert them into the form of valuable products that will enhance the overall business and all of the sudden you have the attention of stakeholders.
Whatever industry you are involved in you can draw from these examples in order to achieve your goal of playing a more strategic role in the company. It is crucial for buyers to determine where they could create a discernible difference. Be at the top of your game and utilize the Kraljic Matrix to isolate and find key areas for improvement. Instead of simply looking at costs make sure you see what areas can make changes and provide an advantage for the rest of the organization. It doesn’t even have to be essential to the core business like the examples above. It could be something as simple as finding a way to provide cleaning services, lawn maintenance or a better office location.
Become proficient in these techniques and look for an opening to present to a group of key executives or stakeholders. Consider using the Kraljic matrix and discuss how you’ve been able to utilize procurement to not only improve the purchasing and spending of the company, but to make improvements in other areas. Being careful not to get bogged down in the details and number crunching aspects of purchasing, you can paint a broad picture that will often appeal to their entrepreneurial minds.
This Kraljic matrix assists people in improving a procurement strategy for the services and products their organization consumes. This medium aims to get rid of as much supply vulnerability as possible and make the most of their potential purchasing power. It also enables you to work in a wiser way with the suppliers you have already. In fact, this is the relationship you should be looking forward to fostering with each of your suppliers. It functions by organizing the product’s profit impact on a certain axis, and the vulnerability of the disappearance of their supplier on the other part.
Procurement managers can utilize this medium in order to provide company executives on board with the strategic role they can play within the overall success of the company.
