Procurement Function — Everything a Procurement Professional Should Know
The procurement function is one of the keys for a business to succeed. The global pandemic and the ongoing war between Russia and Ukraine have disrupted the supply chain. Due to this, it has shed a light on the importance of procurement functions.
This article will highlight the different job functions and components in procurement. We will discuss how it is critical for the company to execute these functions.
After reading this article, you will have a deeper understanding of procurement functions. This will allow you to give importance to these functions that will keep your supply chain sustainable.
Procurement today has become advanced from what we had a few years ago. Many processes in procurement are done using procurement software. E-sourcing has also become a thing to make transactions faster and easier.
The integration of technology with procurement has helped many companies to develop. According to CIPS, procurement is usually responsible for 70% of the companies’ revenue. This is due to the reductions in costs that have greatly impacted its profits.
Although it has made the procurement process faster and easy, many things have changed the ways of procurement. Through the use of social media, people have become more concerned with ethical standards when it comes to procurement.
Mediums like TikTok, Facebook, Twitter, and Instagram are being used to point out the wrong treatment of employers to their employees. Through these apps, many businesses care more about their reputation because of the cancel culture that is popular today.
We all know that the procurement function is concerned with the acquisition of the required materials or services from potential suppliers. It functions to enable the company to meet its objectives by ensuring that the materials or services are sufficient for its daily operations.
Procurement functions to improve the profitability of businesses. In the private sector, it is seen as helping to streamline the processes, reduce the costs of raw materials, and identify better sources of supplies.
In the public sector, procurement helps by maximizing the available funds. It helps by finding suppliers that will give the best possible materials for its project.
Procurement Most Important JobFunctions
Sourcing is the start of every procurement process. You can never negotiate with a supplier without even finding one in the first place. Sourcing starts by checking potential suppliers in the market.
The collection of the supplier’s information is carefully gathered and monitored to ensure that they comply with the corporate policies.
The suppliers are selected based on their qualifications, risk factors, price and quality of products, and policy compliance. One of the factors to control costs is to find the best and most reliable supplier in the market.
Negotiation is one of the skills that a procurement professional must possess. Having great negotiation skills will allow you to get the best deals for the company.
Procurement professionals will discuss all the stipulations on the proposals to come into agreement. Professionals should acquire the highest quality products from their potential suppliers that will suit their budget.
Negotiation is a vital part of the procurement’s function. It affects the profitability of a business if they buy materials that are high in price. Organizations may overspend which will truly affect their revenue.
before they purchase the needed materials,. Even the slightest decrease in the cost of materials will create an impact on its profitability.
The contracting phase happens when the procurement department is done evaluating supplier bids based on price, quality, and value.
The contract will be awarded to the best suppliers in accordance with the requirements set by the organization.
The company and the supplier both sign the contract as proof that they will do their obligations accordingly.
4. Monitors the supplier
The contracting phase happens when the procurement department is done evaluating supplier bids based on price, quality, and value. .
If the procurement department or manager fails to monitor the supplier’s performance, it will greatly affect your supply chain.
Their agreed time of date must be tracked to see if the invoices are paid promptly. Additionally, this function must keep track of all the records of transactions and the inventory to ensure a smooth flow of the process.
5. Compliance with protocols
The procurement department must consider that before they purchase the needed materials, it must first align with the organization’s objective. It must also align its purchases with the compliance requirements.
The procurement department must look into protocols and budget approvals in ensuring that purchases are aligned with the organization’s policy.
6. Utilizing technology
Organizations should learn to adapt to any technological change that will be integrated into the procurement process. This is to streamline and improve the efficiency of the organization.
Using procurement and sourcing tools will greatly eliminate tasks that take too much time.
According to Glassdoor, the total salary of a procurement officer is $87,501 in the United States. Of course, it will be different from other countries due to various factors such as living expenses.
Of course, when you want to enter the field of procurement, you will need to apply to the industry it belongs to.
When you are prepared for the interview, there is a good chance that you will be accepted into an organization.
Most companies in the procurement industry do not use the same questions twice or thrice. The hiring manager will always try to cycle the questions depending on the level of experience of the applicant.
The STAR method is a popular method employed by hiring managers and interviewers. This is to gauge how the applicant can answer critical situations to the best of their abilities.
The trick to answering these questions is to know the scope of the position that you are applying for. In addition, you must take note to answer each question simply and concisely.
+ What is the procurement function?
The procurement function deals with the acquisition of needed goods and services from potential suppliers for its daily operations.
+ Did procurement change?
The procurement process varies for each business but some elements stay the same. The thing that most changed with procurement is the integration of technology.
+ Why is it important for procurement to execute its functions?
It is important to streamline, boost productivity, and improve efficiency in the organization.
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