How Procurement Optimization Adds Value to Organizations

Component 1: Primary Research

  1. What are you doing in your daily procurement in your daily work?

My primary duty as a procurement officer is to ensure that my company has a regular supply of the needed raw materials to facilitate normal operations. On a daily basis, I have to plan on how to source for, purchase and transport these materials at the lowest cost possible and within the right time.

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  1. How many people are in your procurement group?

We are a team of 11 people in the procurement department. Each person within this department has a specific role to play.

  1. As a group leader, how did you distribute each team member different assignment and make the working process smoothly?

As a leader of the group, I always allocate assignments to group members based on their skills, experience, and preferences. I am keen to ensure that everyone is assigned the task that he or she has the capacity and interest to undertake. Proper planning helps in eliminating cases where some jobs remain undone within the department.

  1. How did you make the communication smoothly and briefly when you ask the object circumstance for procurement group member?

Communication is one of the most important factors that define the success of my department. I have created a system where employees can share their views with colleagues and with me as their leader so that we can address issues that might arise during the normal process of operation. We use both the social media and telephones calls to communicate when we are in the field. Face-to-face communication is common when we are back in the office.

  1. Is there any requirement or detail-oriented when you hire a procurement candidate?

When hiring a procurement officer, we have specific requirements that the candidate must meet to qualify. First, the candidate should preferably be a holder of a bachelor’s degree in procurement or higher qualifications. He or she should have an experience of at least two years working in the same position. The candidate should be outspoken and capable of negotiating good business deals on behalf of the firm.

  1. How many vendor and supplier are you work and accept per month?

The number of vendors/suppliers that we work with per month varies depending on the demand and nature of materials needed. On average, we deal with eight vendors/suppliers every month.

  1. In your daily working process, how do you perform the market analysis? What tools do you use?

In my daily working process, I use procurement analytics to perform market analysis. This approach enables me to use quantitative methods to develop actionable plans based on statistical facts. Coupa is the tool that I often use to identify appropriate suppliers based on the quality of the products they deliver, their pricing, and timely delivery.

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  1. What is procurement requisition and how would you process it?

Procurement requisition is a document prepared the production department or the store manager directed towards our procurement department explaining the quantity and quality of products needed and within a given period to facilitate the normal operations of the firm. Once the document is received, it has to be processed by ensuring that the needed items are availed within the specified period.

  1. How to make a contract between procurement group and client?

The procurement department, on behalf of the entire company, often makes contracts with different entities to ensure that there is a steady supply of specific materials. The first step when making a contract is to find a common ground for both parties. The procurement group should ensure that the interests of the firm are protected when developing the agreement. When the team is satisfied that the deal is good for the firm, it will sign the agreement.

  1. Is it often appropriate to use the SAP in procurement working process?

Systems, applications and products (SAP) software is critical in procurement working process. We use it to track our suppliers and in supplier relationship management. In the planning process, it helps to determine how to access the needed resources at the lowest price possible.

Component 2: Secondary Research

The field of purchasing career has attracted the attention of many researchers over the past several decades. According to Easton and Hugo (2018), procurement has become one of the most important areas of management in modern organizations. In the past, large multinational corporations monopolized the market and did not face any significant challenges accessing resources they needed (Munn, 2019).

Suppliers had little options when selling their products in the market. These monopolies would dictate terms and conditions that suppliers had to accept to deliver their products. However, that is no longer the case in the current competitive business environment. New firms are emerging in the same industry, competing for the same customers and suppliers. Companies must now have effective systems that would allow them to have access to raw materials they need at a competitive price. Jeanine (2017) explains that the ability of a firm to have a regular supply of raw materials and other resources needed to facilitate normal operations depends on the commitment and skills of employees in the purchasing department.

According to Hyatt (2017), it is necessary for employees to appreciate the fact that procurement is one of the most important roles in the normal operations of a firm. The price that a company sets for its products depend on the cost of the raw materials. When the materials are purchased at high cost, it would increase the unit cost of a firm’s product, and that would, in turn, increase the price of products.

However, when a firm manages to negotiate for low prices, it can price its products competitively (Purchasing & Procurement Center, 2017). Purchasing officers must also understand that a firm should have a regular supply of all the resources needed to facilitate operations. Cases, where such materials are delayed, may stall a firm’s activities. Hyatt (2017) argues that when there is no regular supply of such materials, it is possible to have cases where the normal operations of a firm stall regularly.

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The team of employees should have adequate skills and experience to realize the desired level of success in this department, as Easton and Hugo (2018) note. The power of negotiation is critical for s procurement officer. Having the right knowledge and experience to negotiate should be critical factors that the management should consider before recruiting an individual to work in this department. Jeanine (2017) argues that it is important to have a system that would help in improving the skills of these employees once they are hired.

On-job training and taking further studies in local institutions of higher learning are some of the steps that a firm may embrace to help equip its employees with necessary skills needed at work. They should learn the significance of teamwork and the need to have a coordinated system where they can understand and meet the resource needs of other departments. Procurement officers should remain committed to their job of making available the resources needed for the company.

Component 3: The Essay

Introduction

Purchasing as a vocation has evolved over the years. The changing forces in the market are redefining the role of purchasing officers and the procurement department as a whole. According to Ølykke and Sanchez (2016), in the past, the work of sourcing for raw materials and other resources needed to facilitate the normal operations of a firm was done by the production department. It means that purchasing was a unit within the production department.

However, that has changed over the past few decades. Companies and experts have come to appreciate that the purchasing department should be an independent unit from the production department because of its significance. The ability of a firm to charge competitive prices for its products, to continue its production activities smoothly without interruption, and to produce quality goods and services all depend on the activities conducted in the purchasing department.

The procurement manager must understand the role of its department in sourcing for relatively cheap products in a timely manner when needed by different departments. Morlino (2019) also argues that there needs to be proper coordination between the purchasing/procurement department and all other units within a given company to ensure that the materials needed are always availed. In this essay, the focus is to discuss the vocation of purchasing and its significance in enhancing a firm’s success.

Discussion

A career in procurement is one of the professions, which are gaining popularity in different parts of the world. As a procurement officer, one is expected to have unique skills and the capacity to source for materials that the employer may need. According to Ølykke and Sanchez (2016), the process of becoming a procurement officer starts with proper training in an institution of higher learning.

Obtaining a bachelor’s degree in purchasing and supplies management is the initial step that one should take towards becoming an expert in this field. Morlino (2019) observes that other than having a degree in the relevant procurement field, it is also necessary for one to equip self with other skills that would enhance negotiation and communication skills. Having a diploma in communication skills is an added advantage for such an individual.

Having the right academic training is one thing and becoming a successful purchasing and supplies officer is another. Once an individual is hired, mostly as an intern at the initial stages of the career, he or she must demonstrate the skills learned. Morlino (2019) argues that it goes down to an individual’s effort and capacity to achieve specific goals set by the superior officers. Procurement, unlike other departments such as marketing or production, does not always hire many employees.

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In the interview conducted in component one of this document, it is evident that the organization only has 11 people working in the procurement unit. When working in such a small department, it is easy to determine the individual output of an employee. Each person will have a specific role to play in that department. In such situations, Morlino (2019) argues that climbing the corporate ladder may be simple or complicated depending on the output of an individual. A performer will always stand out from the rest. The management unit will continue assigning more responsibilities to an employee who delivers good results and promotion will be guaranteed.

On the other hand, the non-performer will also be easily identifiable. Such an individual would either be dismissed from the firm or be assigned roles that are considered less critical. The management is less likely to promote a non-performer in such a small department. It is necessary to discuss what a procurement officer is expected within a firm, means through which he or she can realize success and tools that may be needed to facilitate effective operations.

Role of a procurement officer

According to Morlino (2019), when one is planning to take purchasing as a vocation, it is necessary to start by understanding the role of a procurement officer. Like in any other career, a procurement officer must know the specific responsibilities and roles to be played within a firm. From a general perspective, a procurement officer is expected to source for and deliver needed resources within a given company.

Each firm would have different needs depending on the industry within which it operates. In a company that specializes in manufacturing, the procurement department is one of the most important units. As shown in the review of literature above, the price and quality of the products of a given company are significantly affected by the actions taken by the procurement department.

A procurement officer must ensure that quality raw materials are made available within the firm at the lowest cost possible and within the right time (Ølykke & Sanchez, 2016). The officer can only achieve such a goal by taking the initiative of identifying reliable suppliers who can deliver what is needed. It is not advisable to have numerous suppliers of one product because it may erode the trust.

If the company finds a reliable and trustworthy supplier, it should develop a lasting working relationship with it. However, that does not mean the firm should ignore better opportunities that may emerge in the market. It is the role of a procurement officer to negotiate for better deals on behalf of the firm (Purchasing & Procurement Center, 2017). It means that when new opportunities emerge, the firm should find a way of taking advantage of them without jeopardizing the existing relationship with other reliable partners.

A procurement officer must understand his unique role in a given firm. While the human resource manager, the finance manager, and production managers are primarily focused on the internal activities of the firm, a procurement officer has to engage external stakeholders most of the time. Other than negotiating good deals on behalf of the firm, such an officer must understand that he or she is the image of the firm. Using dubious unsustainable tactics to achieve short-term goals may have devastating consequences on the firm.

Once the trust is lost with the suppliers, it may be very difficult to win it back (Ølykke & Sanchez, 2016). Such officers must be individuals of integrity, always keen on developing and maintaining a lasting relationship with these external stakeholders. They must understand that the trust that can be accorded to the firm depends on the trust and respect that they command as individuals.

Communication in procurement

Procurement goes beyond making different resources available to the firm. Morlino (2019) argues that at this stage a firm defines the quality of its products and customers it wishes to serve. The concept of total quality management (TQM) holds that quality inspection must start from the initial stage of sourcing for materials to transportation, processing, and finally delivery of finished products to the clients. Although procurement is always an independent department, the purchase and suppliers manager must understand the interrelation between this unit and the production department and any other unit that may require different materials purchased.

As such, there is need to have interdepartmental and intradepartmental communication to understand these needs. The procurement department will only order for materials needed by the production department at a given time. As such, it is necessary to have an effective communication system that would make it possible to know what is required in terms of quality and quantity and when it should be delivered.

Maintaining close communication with the finance department will define resources available for the firm. A senior purchasing officer within a given firm should be able to balance financial resources with the demand. When finances are strained, the procurement officer must negotiate with the production manager about the compromises that can be made to ensure that operations do not stall.

Within the procurement department, it is necessary to maintain close communication to ensure that all activities undertaken are properly coordinated. The procurement manager must maintain regular communication with junior officers in this department to ensure that information obtained from other departments about specific needs are delivered to the relevant officers responsible within the right time. During the interview conducted in component 1 of this assignment, the interviewee noted that communication is critical in ensuring that departmental goals are realized. One of them gave an explanation below.

Respondent 1 said, “Communication is one of the most important factors that define the success of my department…, we use both the social media and telephones calls to communicate when we are in the field. Face-to-face communication is common when we are back in the office.”

The respondent explains that the success of their department depends on the effectiveness of the communication system within the firm. Proper coordination is not possible when a firm cannot share information when needed. Hyatt (2017) says that the channels used should ensure that the message is not distorted in any way to ensure that what is delivered is exactly what is needed. Face-to-face communication is still the most effective way of passing messages from one party to another.

However, Morlino (2019) appreciates the fact that sometimes this mode of communication may not be possible, especially when officers are in the field. In such cases, phone calls are effective in providing information or issuing instructions. Social media is also gaining popularity in the modern business environment. Platforms such as Facebook may help to create a community among employees within a given department.

WhatsApp Messenger is also gaining popularity as a tool of communication. However, Ølykke and Sanchez (2016) warn that social media should be used with caution, especially within the purchasing and supplies department. This new media is effective when trying to maintain a close working relationship with customers or in public relations. However, it is not preferred as an official means of communication between one company and another.

Pros and cons of procurement as a career

When planning to pursue a career in purchasing, one should be ready to deal with the cons and he or she takes advantage of the pros. Just like any other career, there are advantages and disadvantages that procurement has. Understanding these factors would help an individual to make a decision as to whether this is a suitable career. Supply Chain Resource Cooperative (2011) advises that it is prudent to choose a given field and seek career growth instead of changing from one field to another. Failure to understand the pros and cons of a given career is one of the reasons why people make the decision to pursue other jobs after some years of work. In this section, the researcher will identify these factors.

Procurement has many benefits that an individual can benefit from if he or she remains committed and consistent. One of the benefits is that one can easily achieve career growth when working in this field. In most of the cases, companies often have a relatively small number of employees working in this department. For instance, the respondent interviewed indicated that they are relatively few in that department, as shown below.

It means that it is easy for the good work of an individual to be seen by the top management unit. Every effort that a procurement officer puts in his work will be reflected in his or her output. Lim (2017) argues that in the current competitive business environment, firms are embracing the concept of lean operation. It means that they would eliminate non-performers while promoting those whose performances are exemplary. One only needs to be dedicated to achieve success.

Respondent 1 said, “We are a team of 11 people in the procurement department. Each person within this department has a specific role to play.”

A career in procurement promises individual financial freedom. According to Morlino (2019), procurement officers in Canada and the United States are paid handsomely. An experienced procurement officer earns in excess of $ 65,000 per year (Morlino, 2019). One of the main reasons why people seek for employment is to have the capacity to pay bills for the family. With such an attractive salary, one would be assured of financial safety for the family.

It is possible to focus on career growth and other social needs in life if the family is provided for (Purchasing & Procurement Center, 2017). The more one gains experience and makes himself or herself relevant to the firm, the higher the salary would be. Such an individual can afford to pay school fees for children in good schools, go for vacation, and get other social amenities that many would consider expensive.

According to Ølykke and Sanchez (2016), a procurement officer enjoys engaging with external stakeholders on a regular basis when sourcing for materials for the firm. While careers in finance and production involves spending most of one’s time in an office or on the production floor, procurement officers spend more of their time away from the office. They have to engage the suppliers, supervise the delivery of ordered materials, and sometimes even focus on finding new suppliers.

It may be physically demanding but there is the benefit of interacting with new people on regular people. It offers an individual the opportunity to share with other challenges of this job and opportunities for growth. When one is stagnating in his or her career, such engagements can help in getting relevant advice on what one can do to achieve progress. The physical activities that procurement officers cannot avoid are also beneficial to their health.

When one is considering pursuing a career in procurement, he or she would enjoy the opportunity of working in different industries and different setting. While a doctor is specifically expected to work in a hospital or similar setting, a procurement officer can work in any organization. Whether an entity is for profit-making or non-profit making, it will need a department that would help in sourcing for needed materials.

As such, a career in this field can make an individual work in various industries and in different organizations. Lim (2017) says that although it is often advisable for a procurement officer to stick to a given industry to enhance growth and ensure that their experience is put to good use, it does not mean that one cannot explore a different industry when necessary. It is possible to move from manufacturing to service industry and still make the experience gained to count in the new assignment.

Having a career in procurement may have several benefits as discussed above, but it is important to understand that there are some challenges that one should be ready to overcome. One of the biggest challenges that one has to deal with is the strict criteria that firms often follow when recruiting candidates in this field. During the interview, the respondent explained that their company is always strict when hiring a procurement officer, as explained below

Respondent 1 said, “First, the candidate should preferably be a holder of a bachelor’s degree in procurement or higher qualifications. He or she should have an experience of at least two years working in the same position. The candidate should be outspoken and capable of negotiating good business deals on behalf of the firm.”

The academic qualifications of such a candidate cannot be compromised. It means that if one has a diploma or lower academic credentials, it may not be easy to secure a job with a good company. The respondent also explained that experience is another factor that is often taken seriously. In this department, people have to undertake specific roles, most of which, involves negotiating fair prices with important suppliers. A firm cannot afford to have a procurement officer who is not tried and tested. Jeanine (2017) explains that sometimes it may force an individual to work as an intern for some period to gain the needed experience. Working as an intern means that one has to sacrifice the financial benefits within that entire period of training.

The response also states that individual planning to work as a procurement officer should be outspoken. They should be able to express their views in an articulate manner during negotiations. They have to convince other parties to accept specific terms, which are favorable to the firm they are representing (Piga & Tatrai, 2016). It means that an introvert may not perform well as a procurement officer. Unlike an accountant or finance officer who mostly deals with numbers, a procurement officer deal with people, and as such, must be social. An individual may fail to excel in this career, not because of limited education or skills but the inability to engage without fear.

Procurement officer should be ready to travel from one geographical location to another. Most of these officers do not spend their time behind their desk. They have to traverse the country, trying to find suppliers who can offer high-quality products at competitive prices. Lim (2017) states that sometimes one may be forced to travel out of the country to access the needed items. For instance, phone manufacturers often travel to China and Africa to have specific minerals used to manufacture these products. Some of these places, like the Congo in Africa that is very rich in different minerals, are politically unstable and security is not guaranteed.

Anything can happen when one is in these countries. One also has to sacrifice the comfort of being close to family members. They are some of the sacrifices that one has to make to achieve career growth in this field (Easton & Hugo, 2018). It would require the individual to prepare family members for such challenges.

Conclusion

Procurement is one of the most important careers in the modern business environment. In the past, many firms considered purchasing and suppliers as a unit within the production department. However, that perception has changed. As firms continue to experience stiff competition in the market, they are forced to develop effective procurement departments, which can enable them to have access to materials they need within the right time.

When one is considering pursuing a career in this field, he or she should understand the advantages and disadvantages that would be encountered. Procurement officers earn attractive salaries and can work in different industries. However, they have to be ready to travel to different parts of the country or even abroad when sourcing for materials needed. Despite these challenges, one can easily achieve career growth in this field as long as there are dedication and consistency.

References

Easton, S., & Hugo, E. (2018). The future of procurement: Rediscovering the fundamentals. AT Kearney. Web.

Hyatt, P. (2017). Step 1 of the procurement process: Conducting an internal needs assessment. Web.

Jeanine, M. (2017). The advantages of strategic procurement. Inbound Logistics. Web.

Lim, M. (2017). How procurement optimization adds value to organizations. Web.

Morlino, E. (2019). Procurement by international organizations: A global administrative law perspective. Cambridge, UK: Cambridge University Press.

Munn, N. (2019). Olympic procurement: Past, present, and future. Web.

Ølykke, G. S., & Sanchez, G. A. (2016). Reformation or deformation of the EU public procurement rules. Northampton, MA: Edward Elgar Publishers.

Piga, G., & Tatrai, T. (Eds.). (2016). Public procurement policy. New York, NY: Routledge.

Purchasing & Procurement Center. (2017). 5 E-procurement advantages. Web.

Supply Chain Resource Cooperative. (2011). Role of procurement within an organization procurement: A tutorial. Web.

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StudyCorgi. (2021, June 14). How Procurement Optimization Adds Value to Organizations. Retrieved from https://studycorgi.com/how-procurement-optimization-adds-value-to-organizations/

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