10 Procurement Value Creation Ideas, Part II

Are You Creating All The Procurement Value Possible?

PurchTips Edition #375

By Charles Dominick, SPSM, SPSM2, SPSM3

In Part I of this two-part series, I shared five procurement value creation ideas.  Here are five more:

  1. Enhance Social Responsibility. A popular marketing angle for organizations is touting how socially responsible they are. Identify changes that you can make in your sourcing work that can inspire your marketing department tout your organization’s socially responsible sourcing on product packaging and/or promotional materials. By aligning its efforts with marketing initiatives, procurement can actually help grow revenue, not just reduce costs.
  2. Be More Agile. Identify products or services that your organization provides to its customers that could potentially have unpredictable demand. Cultivate a responsive supply base that can quickly fulfill unusual increases in demand and also sustain itself during periods of unusual decreases in demand.
  3. Improve Reliability. Procurement plays a huge part in many organizations’ reliability. When a supplier doesn’t consistently deliver inputs on time, your organization will struggle to deliver outputs on time and cost effectively. Identify where your supply base has been unreliable in terms of cost, delivery, and quality and implement changes to ensure that improved reliability flows through the supply chain to your organization’s customers.
  4. Increase Ethical Standards. Whether to correct a historical problem or prevent future problems, ensure that your organization has up-to-date procurement ethics standards. Though it is difficult to quantify the financial value of well-constructed ethical procurement practices, the phrase “an ounce of prevention is worth a pound of cure” applies here.
  5. Achieve Cost Savings. Achieving cost savings is the classic way for procurement professionals to create value. Use negotiation, strategic sourcing, and other methods to reduce the prices your organization pays for goods and services. Additionally, seek out suppliers, products and services that offer efficiencies in energy use, warehousing, maintenance, and other cost-driving areas to achieve lowest total cost of ownership.


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Want More Detailed Help With Creating Procurement Value?

Procurement has an incredible capability for creating value and can do so in many ways. Unfortunately, many senior executives – and, admittedly, even some procurement professionals – do not understand all of the ways that procurement can create value.

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