Monday 17 February 2014

How to Make a Bigger Impact in 2014 – Part 1: Why Procurement Needs to do More than Cost Savings

Authored by Mickey North Rizza

What is your procurement team capable of? When I ask this to my clients many of them find it surprisingly hard to answer. The truth is that we all get so caught up in our day-to-day responsibilities, that we don’t take the time to think about room for improvement or new responsibilities that we could take on.

Here are a few things that I’ve seen are often areas of improvement for procurement teams.

Cost Savings

Cost cutting is still a top priority for procurement executives, but new data shows that realised savings have been marginal – with most procurement teams only delivering 10% savings. How does your team stack up?

If you’re struggling to deliver meaningful cost savings, because of internal roadblocks, maybe it’s time to change your mentality. Promote cost cutting as a way to reinvest in other important projects like marketing or R&D. This way your stakeholders will see your success as a way to improve the business instead of losing resources.

Move Beyond Cost Savings

If you’re struggling to deliver meaningful cost savings, look at your business and figure out where else you can make an impact. Most business leaders are acutely focused on revenue and profit growth – two areas that procurement has the most tools to affect.

Start by making a plan, and getting input from stakeholders outside of procurement. If you want to make a bigger business impact, you have to move beyond your four walls

What do you find the most challenging about delivering cost-savings? Leave a comment below, we’d love to hear from you!

Come back on Wednesday for Part 2

1 comment:

  1. Cost saving alone is not sustainable business approach. My past experience has shown that once suppliers are aware of buyer's intensive cost conscious approach, they evade it by jacking prices upfront or by keeping in mind alternative cheaper quality products. A balanced approach with specifically chosen efforts on procurement factors should be decided during the finalization of procurement/contracting strategy for each project can lead to better output.