Procurement over the years has evolved from a tactical function to a more strategic function where CEO’s are demanding for value and accountability from Procurement officials and even the demand from the boardroom to save cost.  Procurement goes beyond just spending or buying as we have characterized it.

Often at times taking Procurement as purchasing whiles there is a distinction between them is also a contributing factor the challenge to becoming strategic. Procurement must be seen as a strategic function with the responsibility of creating value, implementing strategic functions which is to save cost and avoid cost.

Until a procurement unit or team is able bring on board strategic initiatives within an organization, the recognition given to the Procurement function will also be very low.

Procurement is a process which run from end to end i.e. from the requisition or need identification to the final consumer. It is the process of acquiring goods, works and services for organizations.

Cost-saving is the financial objective to reduce the excess expenses that occur in any business. Cost savings initiatives through cost avoidance where in-depth need analysis is conducted on every requisition despite the value. Need analysis such as;

• Is the item or product requested for a must have? This is the major source of wrong procurement of items and quantities. Without understanding and subjecting the item needed for proper analysis, we will continue to have procurement undertaking unneedful purchases which cost organisations a fortune. There are items sitting at the stores of some organisations which have not been used till date from its date of purchase and occupying space at the stores with its associated cost. This will help in cost avoidance.
• Is it fit for purpose/ use? The continuous edge for procurement to align its function with organizational goals and objective is heightening and procurement must stand up to the task. Need analysis will help procurement know if it must go ahead to purchase an item or not and its related quantity. Sometimes an item can be needed but the quantity wrongly stated and without analysis, it will be purchased which cost the organisations a lot.

Procurement must subject every need request to proper analysis to ascertain the importance of the requested item. Without proper analysis of needs, procurement will purchase every item request that comes to its end and might not always be of value to the organizations output. 

Procurement can save cost and bring on value when they are given the full room to operate without too much interference without tempering with transparency and accountability.  The controls and interest when it comes to Procurement is enormous and CEO’s must be ready to support their procurement staff bring on board some of these strong policy and strategy to make the organization beautiful.

Value Analysis /Value Engineering weighs the cost/benefit ratio of every single function and component of a product. It brings in specialists from across your organisation to propose alternative materials, designs, manufacturing and more – it reduces costs while maintaining and (often) improving functionality. Procurement does not operate in isolation, it works together with other departments to make sure it achieve the common organizational objective. This can be achieved through active stakeholder engagement on products specifications, designs, scope of works and how procurement fits in to ensure proper value engineering when engaging vendors.