“I know a bit about procurement, that’s just buying stuff right?”
If Keith had a pound for every time he’d heard that phrase he wouldn’t have spent 30 years in the world of procurement!
So why is it that such an essential function is often so misunderstood? In this article, Keith shares some common misconceptions about the wonderful world of procurement.
#1 It’s Just About Buying
Many people believe that procurement is simply about purchasing goods and services. In reality, it’s a vital strategic function that involves understanding market dynamics, supplier management, risk management, and much much more.
#2 It’s Always About Cost-Savings
While it’s true that cost savings are essential, procurement is also about value creation, building strong supplier relationships, and ensuring sustainability and quality in the supply chain.
#3 It Delays Processes
Some view procurement as a bureaucratic process that slows things down. However, when done correctly and professionally, procurement can streamline operations and drive best practice and efficiency.
#4 It’s Only Relevant for Large Purchases
Procurement isn’t just about large purchases or capital expenditure. It’s also about the day-to-day operational spend and ensuring that the company gets the best value from every pound spent. Like any function, you want to be able to demonstrate a strong return on investment.
#5 Supplier Management Isn’t Necessary
There’s a real misconception that once a supplier is onboarded, the job is done. In reality, ongoing supplier relationship management is vital to ensure performance, manage risks, and leverage opportunities for innovation. How you collaborate with your suppliers can be a tremendous way to unlock additional resources to drive growth.
#6 All Suppliers are the Same
This view undervalues the importance of selecting the right suppliers aligned to the needs of your business. Different suppliers bring various strengths, innovations, and challenges to the table, so ensure you evaluate these in order to fit your business strategy.
#7 e-Procurement Systems Replace Procurement Teams
While technology aids the procurement process, human judgement, relationship management, and strategic thinking cannot be fully replaced by systems.
#8 It’s Solely a Back-Office Function
Many consider procurement to be a mere support function. However, modern professional procurement plays a strategic role in successful organisations, influencing business strategies and contributing to top-line growth.
#9 Procurement is Only About Contracts
While contract management is a part of procurement, it’s not the entirety. Procurement involves market analysis, negotiations, supplier evaluations, and more.
#10 Procurement Doesn’t Add Strategic Value
This is one of the biggest misconceptions. Procurement, when done right, can provide a competitive advantage, foster innovation, and significantly contribute to an organisation’s objectives. Disregard it at your peril!
So to return to Keith’s opening statement, “I know a bit about procurement, that’s just buying stuff right?” he hopes you agree that understanding misconceptions like this can help businesses unlock the true potential of their procurement functions and leverage them for strategic advantage.
Keith Wright is a seasoned entrepreneur and commercial leader with 30+ years expertise in the building industry. Renowned for his strategic approach, he has saved millions of pounds throughout his career as a procurement expert. With an unwavering focus on value creation, he continuously seeks growth opportunities and operational efficiency for his clients.
As a trusted business consultant, he has collaborated with numerous market-leading companies, developing tailor-made procurement solutions aligned with their unique needs and goals. In 2021, Keith founded K Wright Consultancy after a successful corporate career, aiming to share his procurement knowledge and expertise with business owners, leaders, entrepreneurs, and investors to accelerate their growth. Within just over two years, his consultancy firm has supported 25 organisations creating value in the multiple millions.