Time to dispel a few myths about procurement

We recently published a post from Daniel Ball, business development director, Wax Digital, on how to identify and recruit top procurement talent, read that here. In the run up to the new year, when we might be starting to think about new career moves, either into or out of procurement, we thought it time to set the record the straight with a few home truths about what you might be heading into, or out of! Here’s Wax Digital’s take …

Procurement is rarely considered the most popular department in a business. Occasionally nicknamed the ‘spend police’ who rein in purchasing freedoms, accused of stifling new initiatives that require investment, procurement often bears the brunt of employees’ frustrations.

In their research piece, Deloitte reveals that procurement plays a role in sustaining business growth; particularly crucial as US trade sanctions and retaliatory measures from the EU, China, Japan and other nations has hit global trade hard. As a result, supply chain disruption is likely for many sectors.

As procurement battles with these issues, the negative perception often held by the wider organisation doesn’t help matters. Here are some common misconceptions that many procurement professionals will be familiar with, and how the department should respond to put people right:

“Procurement is all about finding the cheapest supplier”

Ask employees at any organisation what they think their procurement department does, and you can guarantee that many will say that the job is all about sourcing the cheapest supplier. It isn’t.

While cost plays an important role in choosing a vendor, it’s only one factor in the overall process that procurement professionals consider to identify the best suppliers for the job.

Employees should know that vetting suppliers, negotiating the best possible deal, and on-boarding them effectively is a critical part of procurement’s job. In addition, effectively managing supplier contracts is part of the job too.

“Processes introduced by procurement are just a load of red tape”

Look at it from the employee’s perspective; they want to be able to buy the items they need for their job, quickly and hassle-free. But instead, they have to go through a formal process and possibly wait for permission to buy what they need. However, a centralised approach to procurement is essential to keep maverick spend under control. Employees must understand that this approach ensures that only pre-approved suppliers are used, with pre-approved rates. Organisations using eProcurement tools should demonstrate its purpose to those who have permission to use it. The key thing to explain is how using this technology cuts time for purchasing operations.

“Procurement is a part of finance”

Where the responsibilities of procurement and finance differ often isn’t clear to other staff. Many believe that buying activities are simply part of finance, failing to recognise procurement’s role and contribution to business growth.

Employees should know that finance sets the spending limits, and then procurement aims to spend the money in the most efficient and effective way, working with the best suppliers.

There’s no doubt that many, if not all, procurement professionals have heard some comments that made their skin crawl. That comes down to employees not being educated enough to see how crucial the department is to the business remaining successful. It’s key to keep employees across the whole organisation informed on the purpose procurement serves and what process should be taken when buying new items. Only then will those irritating comments become a thing of the past.

… And if you considering a move into Procurement, read the follow-up article next week ‘How to start a career in Procurement.’