Small savings add big to bottom line

“No matter how big or small a company, good and efficient procurement practices will lead to savings and extract value for the business. Where companies spend a significant part of their revenue on buying goods and services, even a small reduction in purchasing costs can have a significant impact on profit” said Christin Obst, the Ohlthaver & List Group Manager for Procurement.

Obst said the procurement process is a vital tool in any business, adding that this tool can be marred by various forms of pilferage stemming from fraud, corruption and bribery. “There is almost weekly reporting about deals that seem to involve some form of bribery, corruption and favouritism. This is not good for any legitimate business, neither for its survival in the long run, nor for its reputation.”
“At O&L we are responsible, driven by our values and inspired by our purpose. One of our values states that ‘we do the right things right’ and for us this includes all aspects of business – from customer service to employee practices, finances and procurement.”
Obst explained that procurement revolved around the extraction of value and involved buying the right commodities for an organization or business to operate with. “PriceWaterhouse Coopers (PWC) recently defined procurement and supply chain management as ‘all activities from our supplier’s suppliers to our customer’s customers.’ And for me, that is hitting it spot on.”
She described the procurement process to always start with a need but from there it could get pretty complex and depended on structure and set-up while also being exposed to the external and internal environment. She added that the role of a procurement professional is extremely important as the availability of goods and services to enable a company to run its operations could make or break a business, particularly in today’s challenging and competitive economic environment: “For that reason, procurement has an impact on the reputation of a company, charity or business in the public sector and how it is regarded by others including its customers.”
Her advice to businesses: “Focus on enabling the procurement function to properly cooperate with a cross-functional team, consisting of several stakeholders in the business. Concentrate on developing and extracting the critical evaluation criteria for awarding the project or expenditure before engaging with potential suppliers. It is my view that the actual end user is urgently required to be part of this decision making instead of keeping him or her as far as possible from the process.”