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Procurement value - so much more than getting a discount

Author: Mark Kusionowicz

I have written before about the changing relationship between buyers and sellers that is being driven by online content and social media. Purchasers now have upper hand and typically travel a long way along the buying journey before even engaging with the selling organisation. It also means that this knowledge now makes it easier to change suppliers, and so they have to add ongoing business value to keep a happy client.  I have tended to focus on what it means for my profession, Sales and Marketing - but what does it mean for Procurement?

 

In a time where Procurement is not yet seen as contributing enough strategic value to the Board isn't this an opportunity to develop a value proposition that is so much more than simply negotiating a better discount?

New skills are emerging within Procurement

Social media, online advice, articles and reviews all have contributed to the process change that has meant that a buyer now carries out their own significant research into suppliers, products and services. They then only involve suppliers when they are pretty sure that they have something suitable to offer and want to do business with them. This means that procurement professionals are now developing the skills to research, understand and communicate the content they find.

Suppliers focus on valued content development

Suppliers have recognised that, in order to be successful in this new world, they need to be visibly contributing value in the research that the buyer carries out. This is especially true in the early phases of the buying cycle so that the supplier is seen as a  'Thought Leader' that will be considered when a purchase is likely. They recognise that, for the content to attract the attention of potential buyers, it needs to provide valuable insight that is wanted during the decision and buying cycle. Inevitably this means that good content will provide insight into latest solutions and developments in that particular market area and procurement professionals will be accessing that on a daily basis.

Supplier relationship management is driving a closer partnership

These days the engagement between buyer and major supplier is one of a strategic business partnership rather than a transactional 'bid-buy' one. In this partnership the role of the selling organisation includes a continuous communication of relevant market and solution developments that can be of use to the buyer. This market intelligence is being fed into the procurement department so it has the potential to become more aware, of the general market scene around a number of related market sectors, than many other groups within the company.

Procurement becomes a centre of excellence for strategic market analysis

With this collection and analysis of market intelligence about sectors related to the core business of the company, and tuned to the company's priorities, the procurement function has the opportunity to become the 'go-to group' for information to inform strategic decisions in, for example,  Marketing, R&D, Manufacturing and Sales.

Can the market intelligence asset contained in a modern procurement department become a strategic value to be recognised by the Board? What do you think?

 

Image courtesy of renjith krishnan at FreeDigitalPhotos.net

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