Creation and performance of the Procurement department

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Value creation in the purchasing department

La Purchasing function appeared in France in the 1970s. Coming from the quality department, her mission is to manage supplies and purchases related to the company's production:
it is a so-called “support” function.
During the 1990s, the performance of the procurement function became essential. Indeed, the importance given to strategies of cost optimization made this function strategic.
Here are three modes of action to integrate innovation into the purchasing process:

• The acquisition of a so-called innovative company,
• The creation of a Research & Development department,
• Close collaboration between buyers and suppliers to develop innovative solutions.

Innovation, which can bring value, can occur in three phases:

• Preparation (marketing intelligence, supplier market research, quality audit),
• The call for tenders (RFI: Request For Information, RFP: Request For Proposal, evaluation grids, negotiation),
• Monitoring the supplier relationship (dashboards, performance indicators, working groups).

Related article: The transformation of the Purchasing function into a profit center

The various ways of innovation for increased procurement performance

1 Involve the internal customer in the supplier relationship

Teamwork is necessary as soon as the need is defined so that the buyer can frame his supply.

2 Establishing a culture of innovation within the company

The performance of the purchasing department depends on collaboration. Indeed, the purchasing department must collaborate with the company's marketing department to thus boost the activity and in particular propose supplier challenges.

3 Monitoring and controlling the performance of the purchasing department

Since procurement is a source of integration of resources external to the company, the performance of the purchasing function implies the degree of satisfaction of the internal customer. This involves the development of dashboards with factual evaluation criteria to qualify suppliers.

4 The buyer must be able to make time for himself

In the end, the buyer must find time. If the purchasing department's strategy for a particular family is to focus on innovative suppliers, it is necessary to be able to detect, select and support them. Meetings with suppliers should also be given priority. A good exchange remains the basis of all commercial relationships!