Being an essential aspect of any larger business, procurement comes with a number of responsibilities, complex tasks, and effective strategies. These include identification of buying needs, negotiation, vendor management, payment processing and the like.
When it comes to manufacturing, the right procurement processes can open doors to better cost management, risk reduction, stimulation of supplier innovation for higher competitive advantage, etc.
But what strategies can help procurement professionals and supply chain functions improve procurement performance in manufacturing? Keep reading to find the answer to this and many other relevant questions and learn how to improve your procurement strategies.
As a procurement professional, you should not only be able to manage the organizational spend, but also implement correct procurement policies.
The latter will help you reach balance in the overall process. However, this makeup only a small part of the whole procurement challenge awaiting you.
Such activities as contract management and supplier lifecycle management fall under the large list of your responsibilities as well.
It’s completely natural that among all these responsibilities you might come across a number of different issues and challenges. The day of the procurement manager is never boring or slow.
Being flooded with a number of tasks, you’ll have to find ways to solve the procurement challenges appearing on your path.
What Common Challenges Do Procurement Professionals Face?
Let’s first have a look at some of the most common issues that procurement managers stumble upon. This way you will be able to dive deeper into the matter and think of better procurement solutions yourself:
Internal or External Stakeholder Communication
Communication both within your departments and with your vendors and suppliers is of crucial importance. Poor communication can lead to misunderstandings and other resulting issues in procurement processes.
A supply chain can be successful only through stable communication within the team and outside the team, particularly with external suppliers and vendors.
Here are a few tips on how to improve communication with your internal and external stakeholders:
- Try to prioritize your suppliers and stakeholders. Evaluate the importance of their contribution to your company and its growth.
- Meet your suppliers and stakeholders on a regular basis. This will enable you to learn about their worries, concerns and possible suggestions first hand. Offer constructive feedback to your suppliers and ask for the same from their side. Keep them updated.
- Come up with options after the negotiations. This will let you have some influence on your stakeholders while at the same time, letting them be the ones who make the decision.
Constantly work on building strong communication with your partners and its benefits won’t make you wait too long.
Another issue that you might have to deal with is cost control. It goes without saying that the costs of products, materials and transportation are constantly fluctuating. Moreover, demand and value are also undergoing changes. You will need to keep up with these shifts and make sure they don’t affect your business negatively.
Proactive Supplier Management
And last but not least, it’s important to have effective supplier relationship management strategies.
Here we can go back to the preservation of solid communication with your suppliers. One way or another, it’s the key to improving your supplier relationships.
Other strategies you can consider when trying to take your supplier management to the next level are as follows:
- Educate your employees and enhance their knowledge about the importance of SRM. This will essentially increase the capability of your team in delivering your strategies properly and communicating with the suppliers.
- If you happen to deal with disputes with your suppliers, be objective and look at the situation from both sides. It’s important not to put all the blame on the suppliers.
- Don’t be late with payments. Your punctuality will show that you are responsible for your part of the work and that you expect the same from them.
Procurement is not an easy task but with the right tactics and wise strategies you can be a success in it.
5 Strategies to Help You Boost Your Procurement
To help you pave the road to a successful procurement execution, we’ve made a list of the 5 most effective procurement strategies. The latter combined with a well-thought procurement plan will boost your business taking your procurement to the next level.
1. Consistent Management of Supplier Relations and Supplier Performance:
The risk of supply chain disruption can be minimized with the help of trusted suppliers. Usually, businesses depend on suppliers when it comes to such issues as cost reduction, delivery service, product quality improvement, product innovations and better and faster product creation.
Keep consistent contact with your suppliers, track their performance and share the results with them consistently. This way you’ll deliver the highest quality procurement services. Moreover, you’ll have trustworthy suppliers, who focus on the KPIs you share with them.
2. Acceleration of Innovation, Production and Time to Market:
Successful organizations expand into new markets by creating and offering new, unique and innovative products. You should do your best to deliver what your customers want ahead of the competition.
This way you’ll highly boost your business and enhance the collaboration with your suppliers creating stronger bonds and business connections.
Procurement itself is an essential part of contributing to this evolution by creating cross-functional teams and operational efficiency. Development of an effective process so as to have a high-quality new product introduction is also important. It will improve supplier innovation as well.
3. Develop your Knowledge of Supply Chain Management:
Learning and gaining deeper knowledge about procurement and supply chain management always come in handy for procurement professionals.
If you are looking for ways to improve your supply chain management knowledge, here are a few ways you can do it:
- A good way to gain deep knowledge can be executive supply chain education. This will help you get knowledge from qualified specialists within a short time. Usually, executive education requires 12-24 months of commitment. Even the shortest class will essentially improve your supply chain knowledge.
- Pass supply chain certification processes. They will let you gain knowledge, experience and skills for performing a specific job or task in the field of supply chain management.
- What can be better than actual practice in this field? A good way to expand your knowledge is by means of cross-training. This will help you look at the supply chain from different perspectives.
- You can also try partnering with universities and colleges. This will be beneficial for both sides – the coursebooks will be improved based on your and your company’s needs while you’ll gain all the theoretical knowledge you need.
4. Customer-Oriented Services and Processes: As a procurement lead:
As a procurement leader, the purpose of procurement processes is to make the procurement professionals or the whole department more efficient.
However, these processes should, first of all, focus on making the internal customer service more effective. That’s how most world-class procurement organizations work.
They aim their processes at meeting the needs of the internal stakeholders or customers.
5. Implement Innovative Software Solutions for Better SRM:
The new era makes different business processes much easier for everyone and creating effective strategies in procurement is not an exception. Take advantage of the innovative software technologies and improve your supplier relationship management making it more effective and organized.
A user-friendly SRM solution will come with a number of advantageous features some of which are as follows:
- Highly simplified supplier management and collaboration process
- Collection of all the required data in one easily accessible place saving you time
- Improved and enhanced supplier performance due to better and more consistent measurement
- Reduced risk of disruptions due to supplier delivery failure
To narrow down your search for the right software solution, you can check out Leanlinking. This software will let you measure and benchmark the services of your suppliers, logistics, quality, innovation and willingness to cooperate.
With the help of LeanLinking, you will get an executive summary for every supplier in just one click. Moreover, your suppliers will also have the needed data shared with them in real-time.
Don’t think twice, choose LeanLinking to strengthen your supplier relationship management and to minimize the number of responsibilities put on your shoulders. This way you’ll be able to focus on other more important aspects of your procurement services.