Effective procurement can transform your business

Melaye Ras-Work, vice-president, of Efficio, talks about how effective procurement can transform your business

Why is procurement important?

“Procurement as a cost represents 30 to 70 per cent of a company’s revenue and yet our research shows that most companies under invest in this area. The good news is that there are now cost-effective solutions that can help companies dramatically improve their performance in this area.”

When it comes to procurement what are the main challenges companies face?

“There are three main challenges. The first is skills. It takes a wide array of skills to manage the thousands of stakeholders that a typical company has to deal with. Juggling the different activities requires a combination of hard and soft skills from a procurement professional.

“The second is level of resources. There are a lot of special projects such as outsourcing or buying a big piece of capital that are one-off, that require peaks and troughs of activity. Most companies are not able to flex their resources up and down to deal with this. The third is tools. A typical finance director is frustrated. An FD is not able, at a press of a button, to find the savings in the bottom line.”

Key points

  1. Successful companies recognise that having a world class procurement function is a source of competitive advantage.
  2. Research shows that 50 per cent of benefits achieved from consultancy projects get eroded over time if they aren’t actively managed. Having access to procurement experts over a longer period of time through a managed procurement service allows companies to address wider elements of spend and to deliver greater and more permanent benefits.
  3. Future trends to look out for in procurement include greater importance placed on supplier relationship management, attracting and retaining talent will be key and, due to the drop in cost of development, more technology will be developed by practitioners for practitioners.

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