Most procurement professionals during challenging times would file the procurement procedure book in the round file cabinet and resort to a more “hand-to-mouth” strategy, but your procurement process can not only help you through challenging times, but also create a competitive advantage for your organization.
Competitive advantage is your organization’s ability to provide products or services that are better and/or provide more value than your competitor. Competitive advantages are typically developed over time, along with contributions from many different areas of your business.
An effective procurement process allows an organization to select an optimal portfolio of suppliers and align those suppliers to the organization’s mission statement. This can be done via favorable terms and promotes and incubates collaboration through cross-functional excellence.
An efficient and effective procurement process can deliver quick but tangible cost improvement and enhance the agility of the supply chain.
Therefore, a well-defined procurement process can provide your organization a competitive advantages by reducing costs across the value chain; causing greater efficiency in the delivery of quality goods and services; assisting with product innovation; mitigating supplier risk; and increasing supply chain resiliency
Procurement departments should evaluate current procurement processes to determine if it supports their organization’s competitive advantage based on the following criteria:
Reduced total cost across the value chain
The primary goal for a procurement organization is to deliver value. An effective procurement department lowers operational costs by purchasing supplies and services at the best available price.
