BUSINESS FOCUS
THE POWER OF PROCUREMENT Keith Wright looks at making better use of procurement focus.
WITHOUT SALES AND customers there is no business, which is why it makes sense for a business to focus on sales. This also explains why there are a lot of books and articles about this subject, as every company must sell products or services to survive. In fact, a recent search on Audible revealed 3349 books about sales alone. But in order to have goods to sell, a business will probably have procured them from somewhere else. According to Keith Wright, managing director at K Wright Consultancy, the same search brought back a total of just 43 books, meaning there are 79 times more books on sales than there are on procurement.
“As a procurement professional, I know how vital this function can be for a business, and how it can work brilliantly to not only underpin the sales line but improve customer service,” he says. “Procurement is a key part of the supply chain, of a business’ ability to serve the needs of its customers, and an essential part of business strategy and planning. Done well, it can help to increase efficiency, reduce costs, and improve quality whilst helping a company grow by expanding into new markets and developing new products. It’s not a choice between focusing on procurement instead of sales, ideally a business will want to excel in both to optimise results for the business.” In 2022 Wright surveyed his consulting clients within the building industry and the five biggest pain points they called out across their businesses included:
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1. Purchasing and sourcing review - where can I improve the performance of my business? 2. Product range deep dive - how is my business performing? 3. Customer and market insights - how does my business shape up in our market? 4. Sales and proposition development - where can we grow profitably? 5. Brand audit - how does my business show up versus my competition?
“I’ve since gone on to launch the Procurement Xcelerator scorecard, a simple assessment tool that provides insights into three key procurement areas. It’s free and takes no more than two minutes to complete, with three questions in each area. In a short space of time, you can benchmark your business, and receive a free report with clear recommendations on where to make improvements to unlock your hidden profit potential,” he says.
The three key areas of the Procurement Xcelerator scorecard include:
1. How to assess the purchasing health of your business.
2. Opportunities to work with your suppliers.
3. The importance of aligning targets and objectives.
Thinking about the business, whether that’s at a branch, region or total level, there are several fundamental questions to ask, he says.
“In relation to “how to assess the purchasing health of your business”, is your spend data broken down by supplier and by
Procurement is a key part of the supply chain, of a
business’ ability to serve the needs of its customers, and an essential part of business strategy and planning”
product category? Is there a formal and consistent process in place that allows you to benchmark your suppliers, and do you have formal signed contracts in place with your suppliers with service level agreements underpinning your key product categories?”
One of the greatest levers to improve business performance, is working with suppliers. Merchants, he believes, should be looking at the opportunities to work with suppliers. “Ask yourself if you have category plans in place that align to the business objectives? Is there a clear alignment of functions
and personnel between your organisation and your supply base, and is there a structured meeting cadence in place with regular review sessions across all key decision makers?,” he says. It’s also vital to ensure that targets and objectives are in place with suppliers, aligned to category plans, and clearly understood and reviewed regularly, Wright continues. “Do you provide sales forecasts to your suppliers and ensure that they are agile and relevant, and that there are clear measures and accountabilities in place against firm targets and objectives?”
Since the launch of the
Procurement Xcelerator scorecard, Wright says that the data is very revealing. For example, 27% of businesses said they have little or no quality purchasing data, while 55% of businesses are unclear about how they work with their suppliers, and 45% - nearly half – of businesses don’t have targets or objectives in place. Wright says that, in total, a staggering 27% of businesses reported that they have few or no controls in place across all three sections of the scorecard. “Remember, these are the businesses that showed up and took the scorecard, others may simply be ignoring the role of procurement in their organisation. Imagine what the business could do with a clear focused plan, that provides the fuel to further accelerate sales and market growth,” he continues. BMJ
www.kwrightconsultancy.co.uk www.buildersmerchantsjournal.net April 2023
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