Enterprise procurement teams – The unsung heroes of Industry.
Have you heard of enterprise procurement?
Here are a couple of words that are seldom heard together by most of us. There are more than 500,000 people engaged in enterprise procurement within the manufacturing sector in India, that is more than 3% of total working population (20-30 million) employed by the sector. A ball-park estimate points out that nearly USD 350 Bn of industrial B2B purchases happen in India every year. That translates roughly to about INR 5 crores of purchase made by each purchase professional, in India, every year!
Think about that figure for a moment, how many of us in alternate professions can lay claim to making such a momentous monetary impact in our jobs, day in day out?
Procurement is important and we need to talk about it.
Purchase teams play an important role in industry – regardless of size, location or domain. We know that there must be someone doing this job, sub-consciously at-least, after all how else would anyone of us get our swanky welcome kits on joining a new firm? How is there always food in our pantry? or How do any of us get our flight tickets booked? Most of us know of that one admin or HR in our companies with whom to coordinate in getting these things. That person is your go-to procurement guy. When it comes to manufacturing companies, this function takes on a much more important role, given the number of machinery units, parts, raw material etc. that are required regularly to ensure production operations.
Yet no one ever talks about the procurement teams and as a result no one ever hears about it. There are very few companies in India that have appointed Chief Procurement Offices or any relevant CXO position representing purchase teams. Even more strangely, we seldom hear about manufacturing companies themselves talking about it as a key differentiator, competitive advantage or USP within their organisation, during shareholder meetings or investor presentations and news interviews.
Purchase teams act as the invisible glue that holds the entire supply chain of any company together. They ensure business continuity and foster growth by constantly improving cost side operations. They build and maintain relationships with ‘000s of vendor across multiple geographies – relationships without which no manufacturing concern of note can survive. They support R&D functions by scouring the markets for exactly the right product, of best quality, at lowest price. A 5% reduction in cost of goods achieved, via better sourcing, can give a company nearly 3-4% higher overall gross margins. This incredible metric is out of reach of even the most nuanced sales strategy, or any single world class product (with additional sales & marketing costs).
When what procurement teams do is so important, the obvious question is how do we bring procurement into the limelight? I believe there is a big need for purchase teams to step up and change the optics themselves. Some of the basic ways through which purchase teams can showcase value they created could be –
1. By bringing CXO visibility-
No better way to do so by achieving the targets set by executive team. Be pro-active in identifying what is going wrong and where to improve across the supply chains. Set achievable targets that are aligned to overall business objectives. Regular catch-ups with senior executives highlighting progress, discussing challenges and ultimately showing progress via collaboration across teams will build better organisational visibility work done
2. Streamlining and improving current systems-
The biggest impediment to procurement teams are the legacy systems around which the purchase process is structured. Shift to new age platforms that can help streamline current processes, ease cumbersome & tactical day to day activities via automation and connect all relevant stakeholders together. A more strategic process, focussing on important business metrics rather than just getting the job done– would be better suited to achieving overall business objectives
3. Innovating, Iterating-
Strive to become internal thought leaders. R&D teams are struggling to procure design prototypes? Introduce 3D printing in the organisation. Admin teams are struggling to stock and account for stationary requirements? Try stationary vending machines. Production activities are struggling because of regular delays from suppliers? Maybe implementing VMI could help. Such changes can only be driven by purchase teams, solve them and become heroes that other teams can look up to
4. Constant learning-
Procurement is still a nascent function with minimal academic thought having gone into improving the status quo. There is a need to be constantly working on new technologies, processes and up-skilling purchase teams in order to serve better. There is an immense amount of knowledge from allied fields such supply chain management, operations research, negotiation and relationship management – with underlying concepts that can and should be applied to our field.
5. External evangelisation-
Network with the best from industry. Talk about what all of us are doing for our organisation and also listen to what other people have to say about us. Attend events and also hold conferences to share knowledge across teams from various industries.
In the end, it is only the procurement teams themselves – that can change the narrative. In the age of automation, when every team/function is being forced to look into itself and prove its relevance against the threat of automation we need to finally awaken from our slumber and play a bigger role in industry. Thankfully with increasing focus on technology and leveraging the same to improve operations and cost side functions, the time is ripe for purchase teams to stake a claim for bigger and more impactful roles in the industry. And as one of the few technology players focused in doing so, we @ Aerchain promise to help you get there.