What is Procurement?

Key Takeaways for Procurement Excellence:

• Strong supplier relationships are crucial to procurement excellence as they lead to improved quality of service, better pricing, and access to the best solutions during critical situations.
• Negotiation skills are crucial in procurement as they help achieve discounts through various ways such as bulk-order discounts, favorable payment terms, competitive bidding, and commitment on contact.
• Digitizing procurement processes can provide businesses with several benefits such as increased efficiency and accuracy, improved compliance, and improved visibility and control.
• Procurement experts can support and lead the facilitation of purchasing system implementation to ensure smooth running and help identify potential issues.
• Illumina Inc. is an example of how procurement professionals can support a company's goals through vendor negotiation and collaboration to acquire necessary resources at the best possible price.

Introduction

Procurement is defined as the action or occupation of acquiring goods and services. In any organization, department of procurement is key function that relies on third party suppliers to provide goods or services. They aim to ensure the organization receives the highest quality at a fair market value from external parties.

We believe it's important to highlight a few of the key aspects of procurement. This begins with supplier relationships, vendor management, to digitizing a purchasing, compliant process, to exploring cost saving opportunities. Discover how procurement excellence is achieved through a high level overview of knowledge nuggets.

Vendor Management

Cultivating relationships with supplier is an essential source to procurement excellence. Strong supplier relationships can lead to improved quality of service, better pricing, and access to the best solution when critical situations arise.

When a vendor has been selected, the next step is to ensure that all necessary paperwork and documentation is collected. This includes:

• Tax forms (W-9 or W-8 Ben)
• Banking information
• Contact Details

Maintaining a positive relationship with the supplier allows the business to excel in operational needs and reap cost-saving benefits. The formula for a healthy business relationship involves regular communication, addressing any issues promptly, and ensuring that the supplier is meeting performance expectations.

Overall, new vendor onboarding is a critical component of procurement. This requires a thorough and comprehensive approach to ensure the supplier is properly vetted, and all necessary paperwork and documentation are completed. while maintaining a transparent relationship focused on progress.

Purchasing Solution Engineer

One of the critical aspects of procurement is negotiating prices and terms with suppliers. When finding solutions, the most important skill set is communication. As a procurement specialist, the main goal is to be a skillful communicator that can supply stakeholders or suppliers with information that is not visible to them to achieve discounts. This can lead to significant cost savings and free up resources for other critical areas of the organization.

Procurement leads can achieve discounts in variety of ways, such as:

• Bulk-Order discount,
• Establish favorable payment terms,
• Conduct competitive bidding,
• Commitment on contact

We will discuss negotiation techniques in future articles. Below is a summary on how to successfully deal with any scenario:

Like exercising or studying for a certification. Some basic and powerful techniques include practice, learning, active listening, maintaining a positive attitude, staying to the point, and understanding the other party's objectives. As they say, biologically humans have two ears and one mouth, so we ought to listen twice as much as we speak. This can represent a metaphorical example how it's important to be an active listener in negotiations.

Every person feels emotions and can get caught up in what we want to say, but it's essential to take a step back and really hear what the other party is saying. Listening carefully, repeating 3-4 words mentioned by the other party, and asking questions will help ensure that you and the other person are on the same page. Understanding the other party’s objectives will allow the door to open for a mutually beneficial solution.

Digitizing Procurement Process

Evolving and automating a procurement process has several powerful benefits for business transformation. This means supporting the implementation of a purchasing system. This process increases efficiency and accuracy for any organization. By automating processes such as purchase order creation and invoice processing, businesses can eliminate manual effort and reduce errors. This helps reduce costs, save time and simplify compliance. This also improves visibility and control. By automatically capturing data from suppliers, businesses can track and monitor the status of orders, deliveries and invoices.

Purchasing System Implementation

Procurement experts can support and lead the facilitation of system implementation. Support scope includes providing internal stakeholders, third party suppliers, and system developers as the software is set up and configured. After going live, procurement leads can monitor purchasing activities and help identify any potential issues. They will then report errors to system developers for a solution. This can ensure that purchasing software is running smoothly and that businesses are getting the most out of their investment.

Overall, digitizing the procurement process can provide a range of powerful benefits for businesses. It helps to increase efficiency and accuracy, ensure the right supplier is chosen, improve compliance, and improve visibility and control. By providing an organization with the help of procurement support and taking advantage of these benefits, businesses can transform their purchasing system implementation and project management processes.

Case Study: Illumina

A famous biotech company, Illumina Inc. utilized procurement professionals to acquire the necessary resources for their next-generation sequencing technology. Procurement experts supported the company goals by negotiating with vendors. Additionally, Illumina collaborated with suppliers intending to develop custom components and parts to meet the company's vision. Illumina acquired the necessary components at the best possible price, ensuring that the company had the resources it needed to develop its revolutionary sequencing technology thanks to procurement support.

In the next article, we will describe the procure-to-pay process and key terms found in the day-to-day professional field.