Procurement is more than just expenses. It is a strategic function that can drive change and provide a competitive advantage for a company. How can procurement specialists contribute to the strategic development of the business?
The experience and insights shared by Yuriy Kostenko, Deputy Director of the Department of Material and Technical Supply at JV “Poltava Petroleum Company” and tutor of the CIPS Diploma in Procurement & Supply in Ukraine, during a webinar hosted by the House of Knowledge platform on the topic “Procurement Specialists Can Do More: How to Enhance the Impact of Procurement on Business,” serve as valuable guidance on this issue.
From Transactions to Strategy
Many companies still view procurement as purely a transactional function. Procurement specialists receive requests, process invoices, and ensure supply. However, the true potential of procurement is unlocked when it is integrated into strategic business processes.
According to Yuriy Kostenko, the strategic role of a procurement specialist begins with understanding the entire procurement lifecycle—from needs identification to asset management. The 13 stages of the procurement process, as outlined by the CIPS methodology, demonstrate the complexity of this function. Procurement specialists who adopt this approach can provide valuable contributions to a company’s development.
The Role of the Procurement Specialist in Business
The procurement specialist acts as a bridge between the company’s internal stakeholders and external suppliers. This position allows them to influence key business decisions:
- Market and Risk Analysis: Procurement specialists gain unique market insights that help bring new ideas, reduce risks in procurement processes, and seize opportunities.
- Cost Optimization: Beyond focusing solely on cost savings, strategic procurement adds value by developing partnerships and implementing innovations.
- Alignment with Business Goals: Procurement specialists must understand the company’s long-term priorities to propose solutions that support these goals and establish appropriate KPIs for procurement.
Your First Steps Toward Transforming Procurement into a Strategic Asset:
1. Analyze Current Processes
Start with an internal audit. Assess which stages of the procurement process work effectively and which need improvement. It’s important to analyze not only the team’s work but also their interaction with other departments.
If you’re unsure where to begin your procurement function audit, check out this step-by-step guide: How to Know If Your Procurement System Works Effectively? A Guide to Process Analysis (in Ukrainian).
2. Develop a Change Strategy
Determine what transformations are needed to achieve business goals. This may include implementing analytical tools, reorganizing team roles, and expanding collaboration with technical and finance departments.
3. Work with Stakeholders
Discuss and prioritize the internally developed procurement function transformation plan with internal stakeholders.
4. Advocate for Procurement
Gain the support of company leadership. It’s essential to demonstrate how strategic procurement can impact business growth and calculate the potential positive impact.
Acquiring New Knowledge and Skills is the Basis for Strategic Changes
To effectively perform their strategic role, procurement specialists must continually develop. The CIPS Diploma in Procurement & Supply program is one of the best ways to gain relevant and up-to-date knowledge. It covers all aspects of procurement, from analytics and risk management to strategic planning and supplier relations.
Equally important is the rethinking of procurement by company executives. The proper organization of procurement can significantly enhance the efficiency of all business processes. Executives must understand that well-organized procurement functions can become a true strategic asset.
Experience confirms that executives who involve procurement specialists early in the planning stages benefit from:
- More efficient resource utilization.
- Faster adaptation to market changes.
- Building long-term partnerships with key suppliers.
Why Should Executives Promote the Integration of Procurement into the Company’s Strategy?
Strategic procurement not only improves efficiency but also directly impacts business outcomes. Here are a few reasons why this is crucial for executives:
Competitive Advantages: Introducing innovative solutions through strategic procurement enables businesses to achieve market leadership.
Risk Mitigation: Procurement specialists help foresee supply-related risks and prevent financial and operational losses.
Transparency Enhancement: Effective procurement improves internal controls and resource management.
Procurement as a Driver of Change
Learning and integrating a strategic approach to procurement can transform this function into a true company asset. Leaders who invest in developing their procurement teams gain more than just a supply function—they gain a tool for achieving long-term goals.
Procurement specialists, in turn, should not hesitate to go beyond their duties, be initiators of change, and strive for leadership. This not only opens up new opportunities but also makes them indispensable in business.
Develop your skills, implement best practices, and shape the future of your company with CIPS!
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