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5 Ways to Transition from Purchasing to Procurement

Perficient’s supply chain team works daily with large companies to define P2P processes related to development and maintenance of large asset intensive infrastructures (e.g. Communications, O&G, Energy). Speed to production and continuous operation are critical in these industries and the value of the Procurement Organization is often overlooked. Procurement doesn’t have to be the necessary evil that ‘slows us down’ requiring extra steps and approvals when the field ‘just needs to get things done’.

How can you change this culture to get Procurement integrated?

  1. Drive Policy Adoption
    • Procurement needs to be enabled to establish and enforce the procurement policy. More importantly, the policy needs to be adopted by the organization. Procurement policies are usually viewed as the rules that keep people from doing things wrong. How much better would it be if people realize why the policy is in place and conduct business accordingly because it is the right thing to do?
  2. Become a Trusted Adviser
    • In many of these asset intensive industries, engineering drives most of the purchasing demand for materials or services. Engineers tend to design to the latest and greatest solution which can present challenges to controlling both procurement and maintenance costs. The integration of Procurement as a trusted advisor in the engineering process will provide the engineer with the necessary information to right fit a solution for the company. Therefore, taking advantage of existing strategic relationships and creating a more uniform network of assets to be maintained.
  3. Communicate “Procurement” Lead Time
    • Procurement is often unfairly blamed for requestors not receiving their materials on time. An effective procurement culture understands the imperative impact of lead times on Procurement’s ability to truly add value. An effective Procurement (not purchasing) Organization is dependent on having the time to negotiate price prior to the execution of a purchase order, not just the lead time to get the product shipped.
  4. Balance Cost, Quality and Risk
    1. All too often, Procurement is expected to find the lowest cost or ‘beat up’ suppliers to lower prices. Cost is only one factor that procurement experts must consider. Procurement adds the best value when they can ensure the right balance of cost, quality and risk tolerance are achieved to obtain the best desired product.
  5. Mitigate Supplier Risk
    • Suppliers spend a significant amount of time convincing your field operators that their product or service is the right solution for your team. It is important to depend on Procurement to evaluate these suppliers’ risk related to on time delivery, corporate viability, product quality and partnership. Procurement needs to be the traffic cop to determine who the company buys from.

Perficient can help as you evaluate how to get the best out of your organization and implement the change necessary to make a successful transition from Purchasing to Procurement. To learn more about Perficient’s supply chain capabilities, visit https://www.perficient.com/management-consulting.

 

Chief Strategist, Supply Chain, Perficient

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