To ensure that your business is meeting its goals, it is very important to have a streamlined procurement process as well as a clear procurement strategy. These goals can range from profitability to sustainability and have to be met if you want your organization to grow and last. To have optimum business performance, it is best if you hire professionals to help you deliver quality procurement services. And of course, procurement advisors are the ones who can provide you with this kind of help. In this article, you will be able to learn what these advisors do and how they can help you and your business.
What is procurement?
First and foremost, before getting into procurement advisors and the benefits of hiring them, let’s go through the definition of procurement. It represents the process by which an organization buys the services and products it needs from other organizations. It can help an organization achieve its goals by purchasing services and goods in an ethical and profitable way. This can be achieved through cost optimization, making reliant supply chains, implementing as well as accelerating digital transformation, and so on.
Truth be told, maintenance, repair, and operations (MRO) supplies are quite critical to the process of keeping all your locations running efficiently. And if you want to have good MRO sourcing, you need to have a good and clear procurement strategy. This is where your procurement advisor will come into play. But, of course, there are other things they can do for you.
What do procurement advisors do?
Apart from creating a good procurement strategy for you, procurement advisors can do many other things that can help your business succeed as well as remain profitable. They can help you reduce your external supplier spend, simplify your supply chain, win market share, improve supplier relationships, and so on.
How will their procurement strategy help you?
When your advisor creates a procurement strategy for you, they are basically creating a roadmap or a long-term plan that in detail explains how your business will acquire as well as deliver essential services and products. This strategy does not only consider wider objectives of your business, its budget, and timeline, but it also takes into account some more procurement process costs or associated risks that might exist. Your advisor will help you create a strategy that will allow you to achieve reduced costs, as well as increased operational efficiency. All of this will positively contribute to the growth of your business. Even though procurement goals vary depending on the business, these objectives will be beneficial no matter what kind of business you might have.
There are different types of procurement
Procurement can cover a variety of different sectors. This can be anything from hospitality procurement to retail procurement. The services you can get for procurement can be split into a few different types.
Direct procurement
Often referred to as the cost of goods sold, direct procurement focuses on the things that make it to the final services and products bought by your customers. In this part, your advisor will focus on ingredients, commodities, or raw materials that are all tied into the bill of the production cycle. In the case of direct procurement, there are usually fewer buyers and fewer sources of supply. So, it can often happen that the procurement advisor has their own budget and gets to make the decisions.
Indirect procurement
Goods not for Resale (GNFR), or popularly known as indirect procurement is the type of procurement that is focused on the critical things for making an organization work. Unlike direct procurement, this one does not go into your final product. If you hire an advisor to help you in this process, they might be buying services or goods in categories such as consulting, marketing, IT, or anything else that is critical in the process mentioned. When it comes to the procurement of indirect services and goods, one could definitely say that it is quite complex. This is due to the fact that there are many suppliers in an organization, as well as many buyers. But, a procurement advisor can help you in this process as they know how to build storing buy and sell-side relationships. They will rarely hold the budget, but will rather act on behalf of the decision-maker or the budget holder.
Supply chain
When it comes to the logistics and fulfillment that is behind your company’s ability to deliver and receive goods through your supply chain, you can rely on supply chain consulting. People who will work in this space are supply chain specialists and can help you run everything smoothly.
What kinds of approaches do they have?
Depending on the factors such as availability, quality, price, risk, and so on, your procurement advisor will use a different approach. This can, for example, be spot buy. In this case, services and goods are easy to find or have a low value. Spot buy usually involves getting three or more fast quotes against the given specification. On the other hand, they will use strategic sourcing which is a lot more diligent. This approach allows them to test the market thoroughly and find a partner for high-risk or high-value projects. Some other types of approaches are operational sourcing, e-sourcing, single procurement, stock procurement, vendor-managed inventory, and so on.
Factors to consider when hiring an advisor
When you want to hire a procurement advisor, there are different factors you should consider. This is important if you want to ensure that your company is making the right choice. You have to determine if the advisor is independent, as you want them to be unbiased when they recommend specific solutions. You should make sure that your advisor has the right experience, and of course, the right credentials to back up their expertise claims. Make sure to ask about examples of their previous work. Tell them to focus on the organizations that are of a similar size to yours, as that is an experience that will help them work for you. If they have a methodology that you are unfamiliar with, be sure to research it to ensure it meets your specific needs.
If you want your organization to be able to meet the business goals it has, it is very important that your procurement strategy is clear, which is why hiring a procurement advisor is a good idea. If you wanted to hire a procurement advisor, but you were not sure about what they can do and why they are important, hopefully, this article has helped you!
