Written by Marijn Overvest | Reviewed by Sjoed Goedhart | Fact Checked by Ruud Emonds | Our editorial policy

Business Acumen in Procurement — What You Should Know?

What is Business Acumen?

Business acumen is the ability to comprehend and assess a business scenario to arrive at an optimal result.

An individual possessing business acumen can effectively gather and evaluate the knowledge of his working environment.

In turn, this can help him not only arrive at a decision but also ensure maximum results.

Business acumen also increases cooperative relationships within a business environment.

The capacity to understand a situation effectively extends around the individual with business acumen.

By generating noticeable approaches, and extensive decision-making skills, they help recognize unseen opportunities.

In turn, this boosts the morale of the team the individual is in. Business Acumen focuses on two integral areas:

1. Company/Industry-focused skills

Basically, company/industry skills focus on understanding profitability management, cash flow balances, market analysis, and assessment. These are areas where an individual possesses business capacity.

2. Strategic/Critical skills

strategic/critical skills focus on strong analytic assessment skills, general perspective approaches, and executing strategic formulations.

Incorporating Business Acumen in Procurement

In procurement, where having the necessary analytic skills that improve purchasing decisions, having Business Acumen is an invaluable asset.

It can help promote competitiveness and success by enhancing company competitive value. 

Additionally, strategic, and critical skills can help overcome integral hurdles in procurement like value risks, opportunity costs, and process integrity.

An individual with business acumen can further bolster a company’s procurement process to avoid these hurdles. 

More importantly, having minimal risks means profitability and competitive visibility for the company.

Why is Business Acumen Important in Procurement?

Business acumen helps a company’s procurement process become more robust, and at the same time, fluid. The procurement process must be able to adapt and resolve changes mid-way.

Moreover, the complex processes and unexpected problems within the middle require adaptive individuals that can formulate the necessary change.

In detail, business acumen helps resolve issues surrounding these procurement processes:

1. Spending Strategy/Profit generation

An individual with business acumen can help the company formulate cost-reduction strategies and potential profit opportunities.

These may be in connection with supplier management agreements, contract creations for onboarding suppliers, and quality supply with strategic sourcing.

Additionally, they can also help with market competitive assessment to ensure meeting financial goals.

2. Sound decision-making

An individual possessing the right skills can help create decisions that: Improve company value, reduce risks, and profitable opportunities for the company.

Decision-making requires strong analytic and critical perception.

These skills that an individual with business acumen possess can be both executed and honed in a procurement environment.  This generates maximum potential value for both parties.

3. Formulating plans

Formulating plans for a structured body as complex as a procurement process is important for its success.

An individual with business acumen can utilize their analytic and company-focused skills to arrive at critical procurement junctures.

These plans usually involve company future, formulating spending strategies, and even supplier management planning.

4. Risks Assessment

Risks are always present in the procurement process, whether expected or unexpected.

Plans on mitigating risks are not always foolproof, but someone with business acumen can ensure its least probability.

Assessing risks in a procurement process is important, as disruptions cause debilitating effects for the company.

Impacts like this can be avoided with a proper risk analysis.

Natural vs. Acquired Business Acumen in Procurement

Natural business acumen is more difficult to pinpoint from acquired business acumen. Natural individuals are those whom you call “geniuses” or “fast learners”.

Though, the latter seems more “acquired” than natural. There’s no defined metric to properly indicate natural geniuses that can show their expertise in procurement.

On the other hand, it’s easier to understand those who are able to acquire business acumen. 

It can be individuals who spend time taking procurement courses, or individuals with more than sufficient exposure in procurement.

Acquired business acumen grows with engaging more in procurement, and with individuals that can teach procurement. 

More importantly, it is always necessary to exercise your skills so that they can remain in prime condition.

Improving your Business Acumen in Procurement

Having business acumen is a great game changer for a company’s procurement process.

It is important to develop these traits to ensure maximum potential growth capability. Here are ways to further improve that business acumen:

1. Financial Literacy

An individual who wants to grow and help improve a company’s profitability must grasp the workings behind the numbers. You can always opt to ask others who know better in the financial field.

Additionally, studying your procurement data, its values and other integral information can help you move around the process.

It is both healthy and empowering to always learn and be taught by individuals who handle the finances.

In this way, not only do you improve your company’s financial position, but also yourself.

2. Understanding your Company

Being a part of a company is one thing, learning about the company and incorporating their values is another.

It is always important to take time and assess your company’s background. Be it their vision, mission, the values they promote, and the work itself.

Moreover, it is important to know what differentiates your company against the competitors.

By doing this, you can further enhance company specific skills and properly adapt with your working environment.

3. Understanding the Business

Of course, it is important to understand the business in general. In this way, you can improve your personal value by researching business matters.

Through this way, you can learn and incorporate ideas and enhance existing processes within your company. Additionally, it can help you enhance your working efficiency.

You can possess the background knowledge to readily adapt with company scenarios.

4. Enroll in Procurement Classes

Investing in educational growth is always integral when it comes to developing something like Business Acumen.

Taking procurement classes can better help you understand how procurement works, and all its technical knowledge.

Moreover, considering courses by Procurement Tactics can help you improve your procurement skills and become better Procurement Professionals.

5. Mentorship

Learning from an expert in the field is invaluable in procurement. Mentors can provide insights that cannot be simply acquired from taking classes.

This knowledge comes from the years of experience facing procurement day-to-day.

Someone with more than sufficient knowledge can help you grow more as a procurement professional with proper guidance.

Things to Avoid in Business Acumen Growth

1. Being Too Closed

Someone can never grow without learning from others. It is always important to consider the input of others when it comes to learning procurement.

By this way, you can gather knowledge gleaned from years of experience. Without being open, or being too reserved to yourself, you lose opportunities for growth like this.

2. Being Linear

Limiting yourself to your own movement can often lead to not recognizing your surrounding opportunities. Moreover, with your limited options for movement, growth may be too slow.

It is important to seek different pathways in moving forward, especially in procurement. Having diversified options can help you choose the optimal way for growth.

3. Being Too Narrow

Being too narrow means that you’re open for opportunities, but you’re closing off to specific types only.

This is not only rude, but also wastes potential perspectives that can provide growth value, once considered.

It is not only important to diversify options, but also have the understanding of these options.

4. Being Stagnant

Not continuing to learn is the biggest sin against growing your business acumen.

Your knowledge cannot grow along with the unexpectedness of the trends. More so, procurement is as flexible as the events that are constantly happening around it.

It is always important to know and understand where and what to learn. In learning this , not only do you grow business acumen, but also improve your environment.

More importantly, you provide value and competitiveness for your procurement.

Conclusion

Fostering individuals with Business Acumen can be a great deal for your company. They can help your procurement team grow, and improve. Through their own growth, they can encourage their surroundings, and positively affect them. 

With a continuous knack for growth, individuals with business acumen can assure your company’s success. 

In this article, you have learned how business acumen helps optimize a company’s procurement process. Through analytic and critical growth, a company can move along with an individual’s improvement.

On the other hand, it is important to remember that mere business acumen is not enough. Fostering its growth is the secret to maximize overall value.