The importance of Procurement in Business
It’s important to understand procurement in business, because it’s not just about purchasing raw materials — it’s about collecting data to succeed.
What is Procurement?
The word procurement always makes us think that it is the process of purchasing. But, these words – ‘Purchasing’ and ‘Procurement’ are not synonyms. A few people might think that they are the same, but they are not. Procurement is a much broader term that includes the process of purchasing also. The sourcing and purchasing of goods and services from external sources is known as procurement to meet the needs of the organization. It will lead the company to profitability and efficiency.
Procurement includes different kinds of acquisitions like,
This process comes into the picture when business is done on a large scale to acquire raw materials and supplies at an affordable and profitable price. Quality, Quantity, and delivery are also considered and taken into account.
Procurement has the following functions:
1) Identify internal business needs.
2) Identifying potential suppliers present in the market.
3) Identifying Suppliers who deliver affordably and efficiently to meet your needs.
Procurement is a “Proactive” process. It involves every step that leads to the obtaining of a commodity through the various functions mentioned above. It has a relational focus. Here, the focus is stressed on maintaining and balancing the relationship with the suppliers. The process is associated with the acquiring of goods and services, supplies of machines, and other equipment either by renting or leasing, or contracting. The value of the item is given more importance than the price. Procurement activity is employed in the environment of production as that is the place where raw materials are used.
Market intelligence can be a key item of procurement; most businesses would like to have as much information about their market as possible.
Market intelligence – Definition
Google defines market intelligence as the information which is relevant to a company’s market, trends, competitor, and customer. The information is gathered and later explicitly analyzed for the purpose of accurate decision making and planning strategy in areas such as,
2) Market penetration.
3) Market Development.
Market intelligence requires accurate data and information which can be used to generate ideas to take that company to the next level. Some common ways businesses can gather this information is to conduct surveys, arrange for meets, call for interviews, monitor the outlets of the competitors for the gathering of data and information required.
The process of acquiring information and data is most certainly part of the procurement process for a business. The main purpose of this is to provide decision-makers with a more clear idea for how to improve business operations and performance. For the process to be successful, data has to be gathered from a good source. As our world is becoming more and more digitized, the procurement market intelligence and the sales market intelligence has become much more available to small businesses as well as enterprises.
Procurement Market Intelligence
This is a process of collecting, gathering, and analyzing information, and segregating the data based on whether it’s relevant or irrelevant to the company’s market.
This type of data is super valuable to decision makers in a business. This, data can provide a vast outlook on the real-time prices of commodities or intelligence to overcome sourcing challenges that will lessen the procurement risks. Even for small businesses it’s important to run an analysis on procurement and market intelligence.
There are four tips to improve market intelligence procurement.
- Market intelligence has to be thought of as a process and not as a mere search. It can also be called resource intelligence. After the collection of data, you can analyze, create insights, try to visualise, and make them into real actions. Thinking of it as a process really helps than approaching it as a search for the answers.
- Staying focused is really important. Do not get distracted during the whole process. Things might be interesting as you get to know, but it won’t provide you with the answers that you’re looking for. Look up at them after the completion of your research. Be clear with the questions to which you need the answers.
- Never fail to be flexible. The process is never going to be straight like, choosing the question, and finding the answer easily. The flexibility will serve you in the best way possible. You can’t find all the information that you need in one page. Be motivated and positive. Move from one type of data to another with an open mind if the answers are not found.
- Check if the process is actionable. The gathering of a bunch of data might seem actionable, but sometimes it may not be. Your market intelligence leads to better decision making and reasonable negotiations. They also help to build proper winning strategies and improve any situation that you are in. Check how the information impacts your situation.
Procurement is one of the most important parts of any business, especially new businesses trying to become viable in a market place. The best thing a company can do to speed up the market intelligence process is to optimize the overall process. Through the steps of analyzing procurement data relevant to you business you will be able to avoid excess expenditures and improve business performance.