PurchTips edition #415

There are often arguments about which department is the most important to the organization. And, sometimes people bring procurement into that conversation. If all the procurement department does is place orders, that department is not likely to have its claims of importance being taken seriously. But, when a procurement department leverages its unique position to be the department that connects internal operations with the outside world, a case can be made for procurement’s superior importance.

How many employees does your organization have? 1,000? 10,000? 100,000? Think of how many profit-boosting ideas that many employees can generate. It may seem like a lot.

But, how many suppliers does your organization have? And, what is the aggregate number of employees among all of those suppliers? I bet it is a huge number that makes your organization’s employee base seem small! Think of all of the ideas that could come from all of the employees in your supply base. Ideas that are rooted in industry expertise. Ideas that are based on an understanding of what your organization’s competitors are doing as well as what your organization’s competitors should be doing but aren’t.

To have access to all of those profit-boosting ideas and not taking advantage of it would be a shame. So, your organization should actively solicit profit-boosting ideas from its supply base. In procurement, our natural reaction is to think that “profit-boosting” is synonymous with “price reducing,” but that’s not always the case. Supplier ideas can help streamline business processes, increase revenue, eliminate waste or provide any number of profit-boosting benefits other than reducing price.

Therefore, it’s important to have certain business characteristics and resources in place to solicit and implement supplier ideas. In the next edition of PurchTips, we will introduce you to those business characteristics and resources.
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As a member of the Next Level Purchasing Association, you will get a ton of educational material at minimal cost! Here’s what you’ll get:
1. A copy of this year’s Purchasing & Supply Management Salaries Report
2. Access of NLPA Library and free monthly procurement association educational webinars
3. Our weekly email newsletter, PurchTips, which contains expert procurement articles and tips
4. The Procurement Training & Certification Starter Kit
5. Access to All 26 Express Courses worth $384.80
6. Access of Purchasing Community and get exclusive member offers