Businesses typically buy products or services from multiple vendors. Procurement professionals handle the details of procuring these purchases at optimal prices. Establishing consistent procurement policies and procedures enables a small business to align its procurement management strategies to its long-term goals and objectives.
Procurement managers identify what to purchase, complete purchase orders, negotiate delivery times, receive products and services from suppliers, review and accept items, and approve supplier payments. Managing procurement as a centralized function can have a positive and negative impact on a business.
Procurement manager jobs are expected to decline by 7 percent from 2019 to 2029, according to the U.S. Bureau of Labor Statistics.
Obtaining the Best Price
On the positive side, a purchasing department can consolidate the requests of multiple departments to ensure that single purchase order and vendor meet the needs of the entire company. This reduces the time it takes to process the requests. Successful procurement professionals develop a good working relationship with vendors and have the ability to negotiate to get the best deal.
On the negative side, working with a single vendor limits a company’s ability to shop around for products and solutions that can address a diverse set of needs.
Knowledge of your Suppliers
Professional purchasing managers, buyers, and agents buy products to use or resell for the whole company, typically resulting in a positive overall benefit, according to LegalZoom. Procurement managers develop specialized expertise to evaluate suppliers on price, quality, and speed of delivery. These procurement professionals know how to interview vendors and examine quality at factories and distribution centers. They also analyze price proposals, financial reports, and contract details.
Once a procurement manager has negotiated long-term contracts for a small business, their cost might outweigh the value they bring in monitoring these contracts while handling smaller procurement activities that could be handled by an office manager. Therefore, an understanding of the pros and cons of procurement is important for small-business owners.
Negotiating Better Contracts
Dedicated, effective procurement professionals negotiate the best deal by identifying the company’s needs and establishing the most advantageous position for contracts. These managers evaluate and monitor products and services on an ongoing basis to ensure the outcomes comply with terms and conditions.
Procurement managers meet with vendors to discuss defective products or substandard services. By maintaining and reviewing a formal record of purchases and product performance, procurement managers monitor performance to ensure an effective supply chain.
Ensuring Quality Control
Robust procurement policies and procedures can help a small business maintain quality and consistency. However, procurement managers tend to work with the same vendors out of convenience and habit. When new opportunities, company policies, and procedures might be too inflexible to take advantage of. Because small businesses make increased use of information technology, procurement managers must focus on using data to make decisions and plan.
At the same time, complex purchases still require personal skill, experience, and insight. For example, effective procurement managers use resources from the Institute of Supply Management to operate effectively, drive compliance, and manage risk.