When it is a question of increasing the efficiency of a company’s operations, thoughts often turn to how to produce more goods for the increasingly competitive market with fewer resources. Various productivity and efficiency enhancement programmes have all but become synonymous with lay-off programmes. Often companies could achieve substantial savings in their operating costs by centralising and harmonising their operating models. The procurement operations of a company are a great example.
In the industrial sector in particular, procurement costs often amount to between 60 and 70 % of companies’ total costs, consisting of both production-related and other costs, materials, services and immaterial products. Many companies could improve their competitiveness on the market in a relatively short time by enhancing the efficiency of their procurement, but many have not seized this opportunity.
Improving the efficiency of procurement is one of the fastest ways to increase business profits. Research has shown that improved procurement and a centrally managed operating model create better results than a decentralized model.
Not only processes, but process competence
Procurement has changed in time with the companies’ changing operating environment. The biggest successes on the global market no longer come to the procurement director who is the best haggler. Instead, the profile of a procurement professional resembles that of business leaders. The management of procurement begins with the creation of an overall picture, mapping the facts and creating a strategy. Simply enhancing the effectiveness of procurement by centralising operations is not enough to improve the company’s results. Procurement competence is also in need of improvement. A good procurement professional not only knows his or her trade, but these days also has business competence, management and change management skills and is socially talented. The importance of social and management skills is directly reflected in the company’s competitiveness. The management of the supplier interface and network is increasingly considered to be part of a company’s competitiveness and overall ability to function.