If money is the engine that makes companies go, then procurement would be the wheels that enable companies to move forward.
Think about it for a sec. Products can’t be made without materials, but materials can’t be acquired without a supplier. So whose job is it to forge partnerships, shape agreements, and hammer out details?
If your answer is a blacksmith, then you wouldn’t be too far off the mark (in fact, if we were still living in medieval times, you might even be correct!).
In today’s day and age, procurement specialists ensure the free flow of supplies and services, much like blacksmiths who toiled in sweltering conditions so that farmers had their tools to collect harvests and miners had someone to sell valuable metals to.
It may seem simple at first, but you’d be surprised at everything that’s entailed. On the surface, it might look like all that’s happening is an endless cycle of buying and selling. But there’s more – so much more – than that.
Procurement teams not only try to keep supply lines from being interrupted, but they’re also responsible for optimizing expenses and realizing opportunities for savings.
And not just for the here and now. They need to constantly monitor situations and forecast situations when immediate savings may cause long-term losses or if large short-term investments can generate massive long-term profits.
Considering how vital procurement is, it’s a skill set that’s both in demand and worth mastering. But what skills are required for procurement, and what qualities do specialists possess?
What’s the Role of a Procurement Specialist?
In simple words, procurement specialists find goods and services for their company. Along the way, they filter out and select suppliers and service providers.
Once they’ve made up their mind on who to do business with, they oversee the purchases of goods and resources like office supplies, real estate, and equipment. Aside from locating suppliers, this can include negotiating prices and making sales agreements. And to ensure the company’s needs are met, procurement specialists prepare plans, analyze data, and compile purchase reports.
A good procurement specialist never compromises on their company’s requirements. Rather, they constantly strive to achieve organizational goals.
The importance of their job can’t be overstated. That’s because their decisions have a direct impact on the company’s expenditures. In fact, if you’re developing a strategy to control costs, it’s a good idea to seek input from a procurement specialist before implementing it.
Hard Skills for Procurement Specialists
There are some basic hard skills that all procurement specialists need if they want to achieve the best results for their organization.
Product and Service Research
Procurement specialists have to maintain a balance between price and quality. This requires comparing multiple products or services in order to find the best option.
Each product should be thoroughly vetted, with aspects like its lifecycle, value, competitors, pricing, and quality standards receiving attention. Procurement specialists spend a considerable portion of their time analyzing product specifications, understanding market value, predicting changes, identifying risk factors, and more.
The more comprehensive the research, the more advantageous for the company. Detailed research can help the company stay up-to-date on market factors, plan for potential obstacles, and find ways to assess the product’s costs and benefits. Also, decision-makers will be better able to make smart choices.
Analyzing Product Costs
Cost analysis allows procurement specialists to figure out an acquisition’s effectiveness at improving the company’s profits. As a result, procurement decisions should always take into account labor rates, general and administrative costs, material expenses, overhead and indirect expenses, money factors, and fees or profits.
When determining the best option, procurement specialists have to consider the trade-offs. This underscores the importance of the long-term benefits of building efficient supply chains that offer competitive products, both in terms of finances and quality.
Inventory Management and Control
Generally, inventory control comes under the responsibilities of a procurement specialist. They have to monitor goods and raw materials in the inventory and place timely orders to prevent shortages.
Inventory control is essential for most businesses. There’s almost always a constant demand for equipment and consumable items. For example, a company that builds computers will need a sizable surplus of processor chips so that they can continuously operate in case there’s a temporary disruption in the supply line.
To support their efforts at managing inventories, procurement specialists resort to software and ERP solutions that can optimize time and amp up accuracy.
Negotiation is a critical skill that comes into play once a procurement specialist has selected a product. They’ll need to agree on the best sales terms, find affordable pricing plans, and finalize delivery options.
Since offers and compromises are involved, procurement specialists should be capable of analyzing the deal. Not only that, but in addition to securing contracts, trust must be established.
While you negotiate with vendors, you can expect multiple changes and amendments to the agreement. A large number of different drafts is more easily tracked by going digital. To streamline workflows, the primary option is to incorporate contract automation tools like AXDRAFT. They can contribute significantly to increased savings in time, stronger security, and more opportunities for analysis.
Forecasting Future Needs
Strategic purchasing is a must-have skill that’s even more important to master. Procurement specialists should be aware of the company’s future needs while managing the inventory.
Forecasting future requirements ensures smooth operations without burdening the company’s budget. This requires tracking changes in the supply market and scrutinizing shifts and trends so that it’s understood whether a necessary product will be available or if alternatives need to be found to avoid shortages.
At times, product requirements and market conditions may force a company to change suppliers. Effective procurement is all about making timely decisions to ensure transitions are seamless and efficient without excessive financial repercussions.
Risk Analysis and Management
An advanced risk analysis focuses on risk exposure. This even involves risk mitigation for assets that may not fall within the company’s typical purview. That’s why procurement specialists must carefully scrutinize each department.
Effective risk management also involves tracking investments and evaluating digital risk factors. With more awareness, a procurement specialist can make decisions confidently and successfully.
These are just a few of the most common risks a procurement specialist may encounter:
- flimsy supply chains
- lack of effective contract management
- no contingency plans
- antiquated software and automation tools
- budget overruns
Soft Skills for Procurement Specialists
Soft skills are just as vital as hard skills. Although often overlooked, good soft skills may prove to be a gamechanger when finalizing a contract. Here are a couple essential soft skills:
Company-Supplier Relationship Management
To vendors, procurement specialists are the face of the company. Establishing strong and long-lasting relationships between the company and its suppliers while satisfying the company’s values and standards is paramount. Effective supplier management builds collaborative ties that allow companies to innovate and gain a competitive advantage in the long run.
Procurement specialists should be able to communicate effectively with suppliers and senior management. Clear communication with stakeholders regarding a product’s or service’s specifications, terms, and prices is very important because it removes ambiguities during financial and contractual discussions.
More importantly, quality communication skills can help you forge strong and profitable bonds with suppliers, which may even contribute to effective contract management.
Internal Stakeholder Management
One of a procurement specialist’s key competencies is to find an effective dialogue with internal stakeholders. Fruitful cooperation helps identify opportunities, devise new strategies, attain a comprehensive understanding of the product, and align KPIs. Engaging stakeholders contributes to cost savings, which appears to be the first and foremost requirement for procurement.
Procurement specialists are not always the ultimate decision-makers. Generally, higher-level management must approve suppliers before finalizing contracts.
A procurement specialist should be capable of convincing their colleagues and managers while removing any doubts. At the same time, they need to entice suppliers into giving a better deal. A procurement specialist that’s ineffective at persuasion is unlikely to add value for the company.
Procurement is a pivotal aspect for any type and size of business as it has a direct impact on the company’s profits and growth. As a team leader, a procurement manager needs to set a good example and advocate for the company’s interests.
Procurement Skills Matrix
The Procurement Skills Matrix shows the main competencies that have a direct impact on successful performance in procurement. It’s a scale that assesses skills, plans onboarding, and aligns performance with the company’s goals.
If you’re thinking of becoming a procurement specialist, it’s important that you understand the ins and outs of such a position. Start by exploring the essentials. At the same time, try to develop a robust, forward-thinking analytical mindset. It’ll come in handy when you’re asked to share your professional insights.
That’s just the beginning. Today, procurement specialists should be familiar with document automation like AXDRAFT so that they aren’t overwhelmed by floods of contracts and agreements. The more they are, the more they can focus their time and energy on matters of importance.
Procurement specialists spend most of their time dealing with suppliers, managers, and colleagues. As a result, they should be good at communicating, negotiating, managing relationships, and finding opportunities to maximize the organization’s profits.
A good procurement specialist is focused on results. They should possess a strong understanding of pricing and cost-related matters. In addition to being good at managing risk, they’re also tech-savvy with good presentation skills.
Procurement is a vast area, so their capabilities are highly diverse. In a nutshell, they can compile lists of suppliers, optimize performance, analyze finances, and make sure their actions are in line with the company’s values and requirements.
First, make a habit of looking at issues from a holistic, analytical perspective before making decisions. Also, never stop learning from your mistakes, and keep practicing your negotiation skills while staying up to date on the latest tech.