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Procurement as an Essential Business Unit

by: Ronald Escanlar

Friday, December 9, 2011 |

Why Procurement is a Crucial Business Unit

To acquire vital equipment or to manage consumables in a company, an executive or an employee has to coordinate with the procurement department. As the business unit most responsible in managing company expenditures with respect to operating resources, the procurement department is as essential as the human resources, the finance, and the operations departments.

The following qualities have been identified by outsourcing consultancy firm TPI to make a company’s procurement department more responsive in providing services to other business units:

Strength in leadership. Leadership skills should make the procurement manager stand out of the department. The department head will need to rely on experience as a stepping stone in achieving company goals. A strong leader facilitates change in the department, enabling employees towards a service-focused strategy for other business units.

Goal-driven organization. For progress to occur within the organization, a clear direction for the organization must be set. Objectives serve as directions that the procurement department can take. These objectives must be understood well among the employees for the department to take the path towards progress.

Support from the top. Including the procurement department in executive meetings and planning conferences emphasizes their significance to the whole company. This show of support gives the procurement department a sense of pride and importance to the business operation.

Empowerment. Providing the procurement department with autonomy enables them to quickly respond and interact with other business units. Less time bogged down in bureaucracy and more time used in providing services result to an efficient company. Autonomy, however, relies on teamwork, and teamwork is made possible with a clear set of goals and responsibilities among employees.

Maintaining integrity. Consistency in providing quality services is a hallmark in achieving integrity and a good reputation. With a good reputation, a procurement department becomes a valuable partner among business units.

A more responsive and dynamic procurement department brings more than departmental change. This will definitely spread to other business units, as the procurement department’s interactions with them rise. Eventually, there will be a need to evaluate this growth and make the procurement department a better business unit.

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