Is there an untapped source of strength lying dormant inside your organization?

People don’t always realize that the purchasing department can have a significant effect on revenue. Surprisingly, it may be managing up to 50% of your company’s sales figure! All too often, the role this department can play is underestimated. It is expected to handle administrative tasks — “Place orders!” — and nothing more. How can you supercharge your purchasing department? By moving from administrative to strategic mode!

Here are 4 tips that will help you rethink and get the most out of your procurement chain.

1. Don’t neglect the procurement chain when formulating business development strategies

Is your goal to increase sales? To develop relationships with new customers or strengthen those that you already have with existing customers? It is important to involve the procurement chain in formulating your development strategies: it can provide you with information you need to develop these plans. What would it take to develop this or that particular customer base? Price-wise, quantity-wise, quality-wise? Ask your buyers: they know your inventory inside out and are aware of purchasing opportunities you can take to make these developments possible.

2. The procurement chain must be part of the communication channels

Anything to do with new customers, new products or new projects must be passed on to your buyers. Then they can advise on matters of pricing, since they are your experts in market prices. Above all, it is vital that the procurement chain should be aware of the budgets assigned to projects that they will be working on. How can you prevent cost overruns if the players in charge of purchases and expenses are not aware of budgets?

3. Invite people in the various levels of your procurement chain to project launch meetings

The purchasing department should be involved right from a project’s inception and should attend its launch meeting. That way, it can quickly share its expertise with all other departments. Everyone benefits from a better understanding of the needs and expectations attached to a project. If they are immediately made aware of specific objectives, buyers will be able to go into action and make the necessary contacts efficiently, guaranteeing better results. Don’t forget that a great deal of information from the market is shared with your buyers. The visibility that the purchasing department can provide could prove to be of strategic importance. How are you using this information?

4. Don’t miss business opportunities because your procurement chain is not optimized

More and more companies will take the liberty of investigating your procurement chain before doing business with you. Make sure it is beyond reproach! Channels of communication between the sales and purchasing departments must be wide open. The sales department must be aware of all information the purchasing department holds on the products, quantities, lead times and services that you provide. That way, sales staff will be able to close deals that will be respected. Maintain an impeccable image by promising parameters that are possible for your business. Your customers will be all the happier.

To sell well, you must know how to purchase well!

Putting these 4 tips into practice will optimize the role of purchasing in your business, and increase your financial performance. You will be better able to create a collaborative, stimulating working atmosphere. Don’t make the mistake of seeing the purchasing department as a sector with little added value. Encourage your buyers to find a place in your organizational chart and allow them to be agents of change!

Are you wondering about the performance of your organization’s purchasing department? The Compas J2 survey will help you understand your purchasing department’s performance so that you can then act on real opportunities for improvement.


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