In a nutshell, the primary role of a procurement professional is to purchase goods and services for their business in a way that creates the most value at the lowest risk. This involves establishing the needs of the organisation, understanding the supply market, running RFPs, sourcing and vetting providers, negotiating contracts and pricing and measuring/reviewing KPIs during delivery.
So, now you know — broadly — what they do, you need to understand the typical traits of people who do this job and what motivates them. Whether you’re considering a career in procurement, or want to know more about the procurement process as a seller, this article will tell you everything you need to know about the process from a procurement perspective.
By the end of this article, you’ll have a deeper understanding of the skills and traits required to be a procurement buyer, the role and responsibilities, as well as the role of procurement during a typical sales process.
Here at Piscari, we have extensive experience in both buying and selling, across a wide range of enterprise companies. We’ve refined these insights over hundreds of deals negotiated worth over £400m, with experience on both sides of the table.
Who Are Procurement Professionals?
Procurement is a department, just like finance, sales or marketing. Inside procurement departments, there are different roles that require different skills and experience.
Here are some of the common roles in a procurement department:
- CPO: Chief Procurement Officer. This is the head of the department, and often reports to the CFO, COO or occasionally the CEO
- Category Leads: These people run big categories of spend, for example, IT, Marketing, HR, etc
- Sourcing Specialists/Buyers: They often focus on categories and sub-categories where they have specialist market knowledge. These are the people that analyse spend data, build requirements and specifications, run RFPs and negotiate with suppliers.
- Contract Administration (usually only found in very large organisations): They ensure that all contracts are loaded onto the supplier management system, manage the renewals calendar and administer contract variations.
- Procurement Administration: Often look after purchase orders, matching issues and supplier queries.
You’ll also often hear the following terms used interchangeably: procurement professional, buyer, strategic sourcing, category lead. Although there are distinct differences (see above), every business is different and will have its own set of specific duties for each role.
Responsibilities of Procurement Buyers
The buying role differs from industry to industry but usually includes:
- Reviewing the quality, reliability and spend-trends of existing suppliers
- Making recommendations and decisions on new product/service suppliers
- Business needs analysis
- Stakeholder management
- Market monitoring, testing and insights
- Category planning
- SLA reviews
- Ad-hoc RFPs and tendering
- Sourcing suppliers
- Negotiating with suppliers
- Contract negotiation
- Managing supplier relationships
- Building and managing the cost-savings’ pipeline
- Proposing savings ideas to finance and budget holders
- Savings delivery and reporting
- Attendance at industry events
The Two Types of Procurement Professional
There are, broadly speaking, two types of procurement professional:
- Those that focus on direct goods and services. They buy everything between Revenue and Gross Profit on the P&L. They almost always have deep category expertise. And they have a direct impact on profitability, so tend to be extremely well-trained and savvy negotiators. Every penny counts, after all. For example, in a retailer, they’d be buying fruit, vegetables, meat, etc
- Those that focus on indirect goods and services (also called Goods Not For Resale or GNFR). They buy everything between Gross Profit and Net Profit on the P&L. They tend to be spread quite thin across multiple categories (unless it’s a global corporate), so they may not have in-depth category expertise. For example, categories typically include IT, Marketing, Professional Services, etc.
Although there are no generic traits for procurement people, there are some themes. They tend to be rationalists, very analytical and almost always highly trained negotiators. They are tough-minded and come across as emotionally detached.
The Priorities of a Procurement Professional
Deloitte’s Global 2021 Chief Procurement Officer Survey is conducted annually to understand the needs and priorities of procurement functions. The ranking of the priorities below changes, but the patterns are always very similar:
- Risk management and governance
- Sustainability, diversity, inclusion
- Digital transformation/enablement including data analytics
- Supplier collaboration, partnering and supply chain integration
What is a Procurement Process?
Just like sales have a sales process, procurement have procurement processes (yes, more than one!).
As a general rule, procurement people tend to be data-driven, rational and process-oriented. They tend to like spreadsheets, processes, assessment criteria and scoring mechanisms.
Although there are many sales processes we could mention, we’ll stick to the major ones:
- Source-to-Pay (S2P). This is the key, big-picture process, that defines the major activities undertaken by a procurement department, typically in a big company. This process involves everything from broad requirements definition and stakeholder engagement, running RFPs, supplier selection and negotiations to contracting, purchase orders (PO), invoicing, goods and services receipt-matching and payment.
- The 7-Step-Strategic-Sourcing-Process. This describes how procurement (sourcing professionals) review the performance and spending of their existing supply base, document specifications, decide on the best way of getting the right suppliers in place, conduct the supplier selection and negotiation process, prepare supplier transition and onboarding plans and measure performance.
- Savings-Delivery-Process. Just like sales have a sales pipeline, procurement has a savings’ pipeline. This is the golden source of all the savings opportunities that procurement has identified, and where each savings opportunity is in the pipeline. Spend analysis is linked to this process — this is where procurement reviews who they spend money with, how much and how often. A book that we’d recommend on this is Spend Analysis by Pandit and Marmanis.
The Future of Procurement
The procurement process has been undergoing a period of transformation over the last 10 years — there is pressure now to leverage technology to make the process more strategic and user-centric.
Gartner’s Top Trends for the Future of IT Procurement predicted that, by 2021, 55% of technology procurement staff will require additional business, digital, and analytical skills to realise business innovation and growth.
In the past, tech procurement leaders were focused on minimising costs and mitigating risks. But with the rise of cloud services and the digitisation of business, the procurement professional’s job description has expanded somewhat, to include generating revenue, driving innovation and retaining customers.
Procurement professionals are strong negotiators: analytical and more rational than emotional. A successful procurement professional is business-minded, data-driven and process-oriented. They are focused on:
- Increasing savings. There are very specific definitions of savings from a procurement and finance perspective.
- Maximising ROI. They are tasked with getting the best outcome at the optimal price.
- Environment, social and governance (ESG): Ensuring the buying organisation is acting responsibly and inclusively.
- Supply chain innovation. Identifying high quality, innovative supply chain partners
- Quality. They need to ensure the supply base can deliver the quality and reliability of service required by the business.
- Mitigating risks. Reputational, operational, financial, etc.
Are there any other key traits or responsibilities of procurement professionals you’d include here? Let us know in the comments 👇
Are you a seller looking for tips on engaging with procurement professionals? Then you might enjoy this guide on selling to procurement.
About the Author: Mike Lander
Mike Lander is a successful entrepreneur and expert negotiator, with a proven track record of buying, growing, and selling businesses for seven-figure sums.
He has a uniquely valuable perspective on negotiating commercial deals, having worked on both sides of the table as a Procurement Director and an entrepreneur.
He now uses his specialist knowledge and experience negotiating hundreds of deals worth £400m+ to empower leaders and sales teams to negotiate more profitable deals with procurement.
Download our FREE guide to negotiating with procurement professionals