Being a procurement manager isn’t easy. Unfortunately, it seems that everyone urgently needs something from you and it’s your responsibility to ensure the business spends wisely. There’s no doubt that the role takes a special set of skills and often goes underappreciated.
In this post, I’d like to shine the spotlight on procurement managers. To begin, I’ll define exactly what a procurement manager is as well as the responsibilities of the role. In addition, I’ll offer an overview of the challenges they face and helpful resources available to them.
What is a procurement manager?
A procurement manager is the person responsible for sourcing products and services for their company. The role is sometimes also called a purchasing manager.
In large businesses, the procurement manager leads a team of procurement agents and specialists. Often, the role reports to a chief procurement officer (CPO).On the other hand, in small- and medium-sized businesses, the procurement manager is often a department of one. In this case, they typically report to the chief operations officer (COO) or chief finance officer (CFO). Regardless of size, procurement teams must work closely with the finance, operations and legal departments.
Procurement manager role and responsibilities
A procurement manager is responsible for ensuring that their business purchases the goods and services that will best help them achieve their goals. Generally, that means finding supplier partners that strike a balance between quality and cost. Additionally, procurement manager responsibilities include reviewing past purchases made by the company. This evaluation determines vendor effectiveness, compliance and ultimately, the business’s return on investment (ROI).
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In the last few years, the role of the procurement department has been changing and expanding. Traditionally, the role focused simply obtaining goods to meet internal needs. However, an increasing number of companies now recognize the insight and value procurement managers hold. In light of their ability to reduce costs, improve outcomes and identify strategic partnerships, it should come as no surprise.
In fact, an article from the University of Michigan comments on this trend saying:
“In-house procurement managers are becoming more specialized, as well. New technology enables them to take on more complex and strategic roles in many organizations. They are becoming more empowered to analyze business operations, identify potential problems and recommend solutions.”
Accordingly, the job duties of a procurement manager have expanded. Likewise, the number of factors they consider when selecting a vendor has also grown.
Procurement manager responsibilities
Key vendor considerations
3 challenges facing procurement professionals
Rogue spend and a lack of business engagement
To be effective, procurement managers must collaborate with every department. Unfortunately, uncertainty or skepticism about procurement’s role often makes winning buy in from the business a challenge. The result? Rogue spend.
Also known as dark purchasing, invisible spend, tail spend, unmanaged spend or maverick spend, rogue spend is any purchase made outside of the procurement process. According to a 2016 report from Hackett Group, almost 29 percent of indirect spend is off-contract or rogue spend. These items are difficult to account for and open the business up to risk.
Dave Hulsen, COO of RFP360 discussed overcoming this challenge on a recent podcast from Art of Procurement podcast. He recommends improving process transparency, being proactive and engaging with stakeholders early. Ultimately, involving stakeholders in solution builds trust and credibility. So, it’s wise to include their input in procurement research, project kick off and proposal evaluation.
Lack of technology resulting in a time-consuming process.
Even in businesses where digital transformation initiatives are widely embraced, technology seems slow to arrive in the procurement department. In the 2018 CPO Survey Report, Deloitte summarized the challenges saying this:
“Despite recognising digital technologies, their impact and imminent uses, few organisations appear to be progressing at the rate that their c-suite executives consider necessary for achieving overall goals. Indeed, in the majority of areas, the level of impact has declined and the forecast application of new technologies is low.”
While undertaking software and IT sourcing for other departments is a big part of a procurement manager’s job, they may still be working through a largely manual process. Certainly, the irony of this isn’t lost on us.
A common source of frustration for procurement managers and internal stakeholders alike is the length of the procurement process. Typically, procurement projects are a result of an ongoing problem that is keeping the business from meeting their goals. Understandably, in this situation, delays and inefficiency are particularly unwelcome. For example, common delays include lengthy requirements research, inefficient vendor communication, a lack of collaboration in proposal evaluation, manual scoring or roadblocks in contract negotiation.
Technology solves many of these issues. At the same time, it empowers better insights, transparency, workflows and RFP automation. In addition, valuable data from a digitized process can be reviewed for optimization opportunities.
Strategic sourcing and supplier selection
As businesses begin to understand the value the procurement department can deliver, the pressure on procurement managers increases. Unsurprisingly, strategic sourcing has grown in popularity to help meet this challenge. The practice focuses on selecting long-term partners, rather than transactional suppliers. Longer, more productive relationships with vendors mean fewer procurement projects and lower costs.
Strategic sourcing starts with picking the right vendor. Often, RFPs compare variety of similar vendors’ qualifications, experience and capabilities. Then, procurement manager evaluate and score the results. Ideally they use weighted scoring to ensure the company’s highest priorities are met. Again, if performed manually, weighted scoring can be a time-consuming process.
Selecting the right vendor isn’t the end of the procurement team’s duties. Indeed, managing vendor relationships is an underappreciated and highly-valuable skill. A procurement manager continually manage and evaluate the performance of each vendor to ensure the partnership remains mutually beneficial. Luckily, vendor profiles can help organize and centralize crucial vendor information for easy reference and tracking.
Technology and resources for procurement managers
To achieve their goals, procurement managers may use a number of tools, processes and resources.
Certainly there is a lot of great technology available to bring digital transformation to procurement. Available solutions target a range of procurement functions from RFPs to vendor management. When seeking procurement and strategic sourcing solutions, G2 and Capterra are great places to start your research.
- RFP management software
- Inventory management software
- Enterprise resource planning system (ERP)
- Contract and vendor management platforms
Associations and groups for procurement professionals
There are many associations and groups focused on procurement. In addition to the nation-wide groups listed below, there are also specialty organizations for many industries. For example, government, education and construction sector purchasing.
Procurement thought leadership and networks
Additional procurement manager resources from RFP360
If you’re still looking for more information about procurement and the RFP process, explore these additional resources from the RFP360 blog.