I hope that you have enjoyed the article “Procurement Cost Reductions Maxed Out?

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Now, I know for some that the idea of a procurement department not primarily focusing on cost reductions sounds strange.  Many procurement professionals and leaders consider cost reductions to be the raison d’etre of a procurement department.

And, until a procurement department approaches maturity, cost reductions should be a big focus of the procurement department.  But, as visionaries, we have to look beyond what drives us today to what will drive us tomorrow.

We have to ask the question:  Once we have 100% of recurring spend under contract and savings is optimized, then what?

And that’s where the shift to a value creation mindset needs to come into play.  And that value creation specifically relates to things that procurement can do to help the company’s sales grow.

So, allow me to take this opportunity to reiterate some of the ways mentioned in the article for procurement to grow revenue and for me to expand upon the ideas:

  • Improving Quality:  A higher-quality product or service can inspire customers to choose to do business with your company instead of your competitors.  By working with the supply base to improve quality of inputs, your organization can produce higher-quality outputs that attract consumer favor, thus growing your company’s sales by gobbling up market share.
  • Speed To Market:  By being first to the market with a new product or service, your company can be the first to come to mind when a consumer wants that type of product or service.  A company cannot sell its product or service if it is not ready to be sold and receiving purchased products and services are often on the “critical path” that most heavily influences when a product or service is ready for market.  (NOTE:  Unfamiliar with the term “critical path?”  Consider enrolling in our online course, “Professional Purchasing Project Management” to learn about all aspects of completing purchasing projects on time)
  • Introducing a New Product/Service:  It can be tough to get more consumers to buy an old product or service.  Therefore, without new products or services, your company’s sales can stall.  But, by exchanging ideas with an innovative supply base, procurement can serve as a conduit for ways to identify opportunities to create something new that will add to your company’s revenue stream.

Charles Dominick, SPSM, SPSM2, SPSM3

Charles Dominick, SPSM, SPSM2, SPSM3 is an internationally-recognized business expert, legendary procurement thought leader, award-winning entrepreneur, and provocative blogger. Charles founded the Next Level Purchasing Association in 2000, oversaw its incredible growth, and successfully led the organization to its acquisition by the Certitrek Group in 2016. He continues to blog and provide advisory services for the NLPA on a part-time basis as he incubates his upcoming business innovations. Charles is also the co-author of the wildly popular, groundbreaking book, "The Procurement Game Plan: Winning Strategies & Techniques For Supply Management Professionals."

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