The cost savings or productivity improvement goes straight to a company´s bottom line profits.
The Client Change Rationale
The CEO wants changes in the procurement function due to the fact that purchasing is simply operated as inferior assistant role. Largest part of the company expenditures (52 percent of NSR) is purchasing of goods, raw materials and packaging –at same time three times less amount is related to company’s salary cost. The CEO finds the purchasing function is operated for formal reasons – and therefore not strategically considered an important part of building business strengths.
Focusing on Procurement is considered the greatest opportunity for the company to build competitive advantages strengths.
It is time to realize the enormous opportunities that lie in exploring the procurement function. Focusing on procurement excellence is considered so highly important because the cost savings or productivity improvement goes straight to a company’s bottom line profits. In other words, if you save one dollar in procurement it will go straight to the company’s bottom line profit. Or it could drive sales in another case, by negotiating lower purchasing prices and donate the whole savings directly into the consumer pocket, at the point-of-purchase.
Better purchasing prices drives competitive advantages over the short- and long-term. Focusing on procurement excellence is the fastest scheme to improve profits, revenues and cash-flow of a company. Moreover, the procurement function operates without exposing the brands or the business to any media risks. For instance, a price increase or employee layoffs are among the alternatives to drive bottom line profits – but, they could trigger off bad publicity in media. Procurement management occurs inside of the company surroundings.
TPC-Consulting objective is to change the procurement role from being solely a cost center role into being the company’s greatest profit center. Our objective is to help the company to create competitive advantages through establishment of best-in-class procurement practices.
TPC-Consulting Core Modules and Content
- Create competitive advantages
- Outlining the procurement profile
- Disciplined focus and work processes
- Develop procurement business plan
- Key performance metric system
Building procurement strengths is about uncovering new business opportunities and to accept the challenges that help to create continues values for the current business. The values of executing professional procurement department must be acknowledged and emphasized to the whole organization as one of the core factors to build competitive business strengths.
In the past, the purchasing prices and the transport cost was visualized as being fixed. But, after going through rationalized thinking and by identifying that the procurement cost accounted for the largest part of the company expenditures – then the opportunities are waiting to be explored. The company will leverage procurement to its best as one of the core foundations to drive continual competitive advantages strengths.
The company has visualized large cost savings through focusing on procurement. Thus, the position of procurement has strategically changed, in line with the new company vision, mission and values statements.