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Procurement is...

profits smallbusiness May 06, 2021

Procurement Is…

 

Procurement is buying stuff.  Anything you need to run your business such as office supplies, accounting services or social media management is stuff and the only way to get it and use it is to buy it.  Really it is a simple process but most small businesses see it as asking a trusted person for their person or a recommendation making a call and then signing some form of obligation.  

 

If you take a step back and think about Procurement as a way to manage the investment of your time and budgets, you will uncover a growth opportunity for your business.  Good procurement is actually the only way to increase profits without having to increase sales.  Think about it.  You can increase your profitability without having to acquire new customers or invest in more capacity by looking at how you buy stuff.

 

Other benefits of good procurement include:

 

  • Cost management

  • Risk reduction 

  • Brand protection 

  • Understanding your suppliers

  • Using data to make decisions

  • Improving supplier performance

  • Cost reduction

 

It is a key business activity that drives profits.  So what does good procurement include?  

 

  • You have to understand what it is you need to buy by defining your requirements 

  • Be able to understand the supplier market so you know who to include in your competitive sourcing process

  • Negotiating critical contractual terms, including costs,  that safeguard your brand, data and overall ability to operate

 

There can be a lot more to procurement but what I outlined above are the essential capabilities you should have if you want to possess an additional lever for increasing profits quickly and sustainably.

 

I will be posting more about Procurement and Cost Management.  Until then, please reach out if you want to know more or you think SORCedu can help you improve your bottom line.  [email protected]   

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