Procurement management is a sustainable and systematic approach to purchasing, which is used by businesses to obtain goods and services. The pervasiveness of the internet has greatly improved the procurement management process, as it is now easier to communicate and gather information online for purchasing- compared to when phone calls, faxes and snail mails were the order of the day. The availability of various digital tools has also helped to speed up the procurement cycle and simplify the task of procuring services from external parties.
A procurement manager is assigned to handle the myriad of tasks parked under the procurement management umbrella, as well as oversee the procurement cycle of a business. He/she is responsible for planning, directing and coordinating the purchase of materials, products, and services for the company. As a key member of the management team, a procurement manager holds a major role in an organisation.
According to the US Bureau of Labor Statistics, the average annual income of a procurement manager amounted to US$111,590 in 2016. Let’s take a closer look at the role of a procurement manager and the key skills for procuring products and services for businesses in an efficient and sustainable manner.
When procuring services from an external party, the procurement manager is responsible for evaluating prospective suppliers, negotiating contracts and reviewing the quality of the products and services being provided. The ability to evaluate suppliers is a key skill for procurement, and it is a critical task that must be carried out by the procurement manager before procuring services from a supplier. The purpose of evaluating prospective suppliers is to ensure that the products and services offered by the suppliers are capable of meeting organisational needs in terms of time, quality and quantity. Procurement managers add true value by gathering information on potential suppliers through seminars, trade shows, and conferences. Simultaneously, they are also in charge of keeping abreast of latest industry trends and obtaining contacts. Subsequently, they assess the capabilities of prospective suppliers by visiting their factories and supply chains, and discussing minute details on product design, quality control and delivery methods.
Throughout the procurement cycle, the procurement manager is the primary contact with prospective suppliers, and must ensure that they can deliver the exact quantities of selected goods or services within the given time frame, without foregoing quality. Product defects, a lack of supplies and arrival delays can create a negative chain effect across other areas of the business and threaten its profits and reputation, highlighting the importance of supplier evaluation in the procurement cycle.
Secure purchasing deals
Apart from evaluating suppliers, a procurement manager must also analyse the market to secure the best purchasing deals. This is done by comparing the prices of goods and services from different suppliers, analysing the company’s sales patterns and inventory levels, and keeping abreast of market changes that affect the supply and prices of goods. Securing good purchasing deals is a key skill for procurement. A procurement manager is expected to ensure that the products and services purchased have the correct business specifications, are bought at a competitive price in the right quantities, and delivered within the right time frame. A procurement manager can also add value by suggesting other options for standardised materials or general services to increase savings for the company.
Having gathered enough information on prospective suppliers, a procurement manager proceeds to select the most suitable supplier and procure their services, or place orders for their goods, through a deal. As a buyer who purchases items for resale to customers, procurement managers will be the ones determining which products to sell. Therefore, another key skill for procurement is the ability to predict market appeal. Selecting the wrong products could adversely affect business revenues, so it’s important that a procurement manager is up-to-date on current market trends. As the main contact between the company and the supplier, the procurement manager is also responsible for preparing and processing purchase orders according to company policies and procedures at this stage of the procurement cycle.
Overall procurement management
After the purchasing deal has been closed, a procurement manager takes control of the next steps in the procurement cycle, which consists of several responsibilities. A good procurement management practice is to maintain transparency in the procurement process, for the benefit of buyers, suppliers and stakeholders. This not only ensures accountability, but also improves the company’s procurement processes and creates a globally competitive supply base. To do this, procurement managers should have a full overview of the procurement management process.
At the start of the procurement cycle – when supervising the procurement process – procurement managers must ensure that best practices are utilised and each process is done according to the procurement policy to prevent fraud and unnecessary expenditure. Improvements to the procurement management approach can be done by continually analysing the company’s ongoing procurement activities such as requests for proposals and contract negotiations, as well as procurement expenditure, team performance, and alignment with organisational goals and objectives. This information is best placed on a central procurement dashboard.
When benchmarking the company’s procurement management process, it is important for procurement managers to put in place a benchmarking process and consistently monitor KPIs and key company targets. These data hold valuable information that can contribute towards the success of procurement management and the business. Having access to such data, as well as records of purchased goods, costings, deliveries and inventories, the procurement manager is also responsible for preparing reports for upper management, stakeholders and the procurement team.
As the procurement team leader, a procurement manager is expected to optimise team resources and ensure good coordination between team members. As such, he/she should be aware of the roles and responsibilities of each team member and ensure that all activities in the procurement department are carried out as scheduled. Regular meetings should be held with staff and suppliers to discuss the department’s performance and resolve any issues in the procurement process. These process improvements are imperative to deliver top performance, add value to the company’s business practices, and increase savings.
We hope that this article has helped you understand the roles of procurement manager a little better. If you want more, visit our Procurement Learning Centre for more procurement-related articles as well as tools!
Or if you are interested in upgrading your organisation’s procurement, ThunderQuote offers a full enterprise software suite to digitalise and automate your procurement processes.
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