We all know procurement’s biggest impact, at least historically, has been saving money. I mean, ask any non-procurement person and more often than not they think of procurement as negotiators, if they know what the function does at all.
Interestingly, though, jump on LinkedIn or read any current article, and you’ll have a tough time not reading a sentence without the word ‘value.’
A shift is happening.
Modern Procurement
Procurement is evolving. There’s a greater emphasis being placed on creating value for the organization rather than solely focusing on savings. This shift improves the procurement processes while also strengthening it’s role within the company.
Let’s take a look how modern procurement differs from the old-school model, along with advice for leaders looking to maximize their impact.
Value over Savings: Old-school procurement concentrated on securing the lowest possible cost from vendors. In contrast, modern procurement focuses on creating long-term value—whether through strategic vendor partnerships, improving product quality, or fostering innovation. The goal is to maximize value while also creating savings. A twofer.
Strategic Approach: Traditional procurement was often transactional, with a focus on immediate results. Modern procurement adopts a more strategic mindset, aligning procurement goals with the organization’s broader objectives. It goes beyond just buying goods and services and instead contributes to the overall growth and success of the business. Win win.
Collaborative Mindset: While procurement teams in the past worked more in isolation, today’s teams collaborate with various departments across the organization to ensure that procurement decisions align with company needs. By involving cross-functional teams the function ensures that their decisions have a lasting, positive impact on the business. The long run.
For many practitioners, this is where they’ve always wanted to be or how they always saw themselves. Unfortunately, it hasn’t happened or their peers and leaders don’t see it that way. So what does it mean for future leaders?
Advice for Leaders
Think Strategically: Ensure your procurement goals are aligned with the broader business strategy. Don’t just focus on cost-cutting. Look at how procurement can add value by helping the organization stay competitive, increase profitability, and drive operational efficiency.
Engage with Other Teams: Collaborating with other departments, such as finance, marketing, and operations, will help you better understand their needs and challenges. By aligning your procurement strategy with their objectives, you can make decisions that benefit the entire organization, not just the procurement team.
Focus on Vendor Relationships: Building strong, long-term relationships with vendors should be a priority. Rather than constantly pushing for lower prices, work together to find mutually beneficial solutions. This can lead to better long-term value, which is highly beneficial for the company.
Be valuable
Collaboration is key to maximizing the impact of procurement within the broader organization. The goal is to align your strategies with the company vision and mission. By being the conduit between departments across the organization you can help drive value like nobody else. That’s a unique place to be. And, right now, it’s a hot commodity.
Companies are investing in procurement and that means the opportunity is in front you.
Reach out and grab it.
See you next week,
Mat
ps. Fill out this poll below and I’ll post about the results on LinkedIn, thanks!
