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Building a top-performing procurement organization

A recent report from Harvard Business Review identifies three things procurement organizations can do to increase their overall value to their organizations.

Over the past decade, procurement has shifted from a purely back-office function to a strategic cornerstone within businesses. Strong procurement organizations function like the central nervous system of an organization by creating synergies across the company.

As the responsibility of procurement has evolved, so has the challenge of maintaining a top-caliber team. A recent report from Harvard Business Review identifies three things procurement organizations can do to increase their effectiveness and, in turn, their overall value to the organization:

Identify ways to save beyond what was cut from the bottom line

Typically procurement teams correlate business savings with price reductions they were able to negotiate with suppliers. However, there’s a long list of alternative savings opportunities procurement can focus on. These include operational efficiencies such as shortened purchasing workflows, increased on-time payments, reduced touchpoints per requisition and freeing up working capital by negotiating better terms with suppliers.

Because Amazon is a dynamic marketplace, procurement organizations can view products and prices in real time, allowing them to evaluate thousands of suppliers at once. Users can search, select and order business products based on price, reviews and supplier preferences. By consolidating spend on a dynamic marketplace like Amazon Business, organizations can decrease the overall number of suppliers managed, freeing up the resources to tackle higher-value initiatives.

Use data to drive collaboration and decision-making

Procurement experts stress the importance of spending time with decision makers and executives throughout the organization. It’s critical to understand their vision for strategic sourcing and how that direction will ultimately translate into purchasing decisions. To gain the attention and buy-in of decision-makers around the organization, procurement needs to bring data and information to table.

With Amazon Business Analytics, procurement teams can identify purchasing trends that could influence subsequent supplier negotiations.

Be willing to adopt the right technology for the organization

Many companies interested in sourcing and procurement technology find themselves evaluating several options: an integrated, end-to-end software application that addresses most of the source-to-settle process, a custom-built platform that combines best-in-class point solutions or a legacy system. Understanding how your organization’s end users prefer to buy is critical to choosing the right purchasing solution. For example, many professional buyers prefer an “Amazon-like” purchasing experience where products are easy to find, prices are transparent and fulfillment is fast and reliable.

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