Profit from Procurement

7SUPPLIERS: Engaging Effectively

Procurement as a function sits in a privileged position.

On the one hand, it faces off to its organization—an organization that must successfully deliver products and services to its customers. To do this, the company creates value for its customers through the activities upon which it chooses to focus. Whether that is manufacturing a product, delivering care to patients, serving people food, or whatever else it is that the company does.

But here's the thing…it can only do that with the help of other organizations. Companies generally focus on doing what they do best, and for most other things they work with partners. This is the other half of the Procurement equation. Procurement also faces off to these partners and its suppliers, and it must provide the critical link between them and the business it serves.

Given that there has been a growing trend in recent years for companies to use suppliers to do more for them as the former focuses efforts on being excellent at its core activity, it's hard to think of a more important business juncture at which to sit.

But, for the majority of these suppliers with which a company works, there is not much to write or talk about—certainly not enough to fill a chapter of a book about how to unlock Procurement's profit potential! These are organizations that provide a non-critical product or service…like the stationery supplier to the banking establishment. Sure, the bank needs pens and paper for its employees ...