Expand or die. It may seem like a brutal ultimatum, but it holds some truth when it comes to the business world. Organisations, like the universe, cannot stay still: they expand or they contract. That’s it. If you want to keep operating, you have to keep growing.
But this growth needs to come in a deliberate, measured and calculated manner. The right opportunities for innovation need to be identified, whether that’s through the supplier base or an internal shake-up, and acted upon in the right manner.
Procurement is in a unique position to help an organisation do this. Not only do procurement officers have the best understanding of an organisation’s supply chain, they also have a good overview of the company’s overall spend, and – with the right software platform – can break this down into category, supplier and department.
It’s only once you get a handle on where your money is going that you can truly capture new opportunities for expansion.
5 ways procurement can help you expand
Make sense of data
Everything stems from data. Supply chain visibility, effective negotiation, departmental collaboration, vendor management – none of this is possible without data collection and data organisation. But it’s the latter of those two that is holding back many organisations.
Unless we can organise our data in such a way that useful insights can be gleaned from it, it’s utterly useless. Some of the biggest complaints we hear from organisations is a lack of ability to collaborate between departments and the difficulty of identifying the weaknesses in supply chains.
With modern spend analysis, data is cleansed and organised in such a manner that all departments can access it and see what they need to, in a layout that makes sense to them. This process, once setup, is heavily automated, freeing personnel from time-consuming, repetitive data entry tasks (prone to errors when performed by humans) and allowing them to focus on the innovation, strategy and supplier management that can propel organisations.
CSR and customer loyalty
Corporate social responsibility is a practice that organisations have been grappling with for many years now. Broadly, it asks organisations to align a business’s social and environmental activities with its values. The goal is to reduce stress on the environment and improve conditions for disadvantaged groups in our society.
The role of procurement is pivotal to achieving this. A deep knowledge of the supply chain is needed to eradicate modern slavery (which is more pervasive than many think) and responsibly work with small, minority-owned vendors.
The greater good is the long term goal. Short term, it’s about attracting and retaining clients and customers, all of whom are watching. The modern day consumer wants to buy from environmentally and socially responsible companies, and who your vendors are and how they operate impacts you. Only procurement can provide the visibility you need to successfully introduce and prioritise corporate social responsibility.
Gone are the days when procurement was seen only as a cost-cutting mechanism. It is now a key player- if not the key player – in developing strategy and identifying opportunities for innovation, and this makes sense. As we mentioned above, if aligning social and environmental activities with your values is to be driven by procurement, it follows that procurement is a key driver of strategy and innovation.
- Where are the innovative suppliers?
- Which goods or services are appropriate for a strategic overhaul?
- Which suppliers are located in stable locations, from a political and environmental perspective?
- Which supplier bases should be consolidated?
- Which supplier bases should be diversified?
These are the questions you need to ask if you want to continue expanding your business, and the procurement department is in the best position to give you the answers.
Drive down financial waste
Yes, procurement has moved beyond a simple cost-cutting exercise, but it still has the greatest capability to stop your company bleeding money. With the right spend analysis software, you can keep track of the supplier base and manage contracts in the right way.
Too many organisations lose vital knowledge when employees walk out the door. Contracts simply roll over automatically when far better deals are available, or the contract ends and you find yourself operating without a contract as the supplier ups the price at a whim.
Get deep knowledge of your spend, and control it.
- Locate the mavericks and remove them.
- Find the departments creeping over budget.
- See your spend from multiple sources.
- Sort spend by category and find who is spending where and how much.
Enter new markets with confidence
It’s time for your organisation to expand into new markets; you want to take advantage of innovative suppliers not traditionally a part of your supply chain. This kind of transition must be done carefully, and only once extensive research has been conducted.
To tap into new global markets, procurement must lead the way. Procurement is in the best position to locate, assess and contact the suppliers best suited to your organisation. Not only that, but they’re also in the best position to collaborate with other relevant internal departments. A unified approach to new markets is the surest way of engaging them successfully and making the most of all they have to offer.
Give procurement 20/20 vision with cutting-edge spend analysis
The procurement function cannot be done right without a rigorous spend analysis platform. Purchasing Index has helped numerous organisations adopt cutting edge spend analysis software, powered by machine learning and modern AI.
You need to expand, and you need to do it responsibly. The first step is understanding where you are now before you take that next step. Get in touch with the team at Purchasing Index, and give your procurement department perfect sight to identify opportunities for expansion.