Procurement For Businesses

There are so many things that organisations purchase within the course of their operations. These may include raw materials for their manufacturing and processing activities, equipment, and stationery for their staff, furniture, snacks and food for employees, gifts for their clients as well as employees. While the organisation can handle these activities on their own, there are financial benefits that accrue from the use of professional procurement consultants and experts. We take a look at how working with a procurement consultant affects the organisation's bottom line.

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Negotiation strategies and skills

For every purchase made in an organisation, negotiations are inevitable. In order to get the best price or fee, the negotiator must have a good strategy as well as proper skills. The better the strategy and skills, the higher the likelihood of a better price or fee as well as the terms and conditions of purchase. A procurement consultant understands what strategies are appropriate for different products and services and has the prerequisite skills. Therefore, working with one enhances the likelihood of a better deal.

Market research

Market research is an important component of procurement. It helps in identifying different suppliers, gauging their affordability, understanding the credit terms offered and the general terms and conditions of the transactions. Market research therefore gives your organisation the information necessary to compare these suppliers and ultimately identify the most affordable one that also offers the best credit terms. This could save your organisation a lot of money and enhance the short term liquidity and cash flow positions. Liquidity and cash flow are important in enhancing the short term operations of the business.

Enhancing the process

Another way an organisation can benefit from hiring a procurement consultant is through guidance on the best ways to improve the procurement process in the organisation. This may include the automation of some of the processes in order to improve efficiency, developing appropriate procurement procedures, instilling appropriate financial control measures for procurement processes and ultimately minimising time wastage during the process. All these have financial benefits for the organisation since they prevent misuse of resources.

Training employees

Hiring a procurement consultant can be an expensive affair in the long term especially for small businesses. However, the consultant can train internal employees on different aspects of procurement ensuring that these employees can take over when the consultant exits. Proper training and apprenticeship gives ensures that efficiency in the process is maintained even after the consultant leaves. This may be cheaper than formal training in procurement and takes less time.

The financial benefits of hiring a procurement expert can be direct or indirect as evidenced above. However, the organisations must weigh these benefits against the costs involved before the final decision is made.