Konstantin von Bueren


The Rise of Corporate Procurement.

Procurement within large organisations has evolved from an important role to an essential one. Procurement has played a central role in large corporations for many generations but as the world continues to feel smaller and international trade becomes increasingly accessible, large corporations simply cannot afford to ignore its role in 2022 and beyond.

What is procurement's role in large corporations?

Procurement for large corporations is far more than simply heading to the nearest wholesalers. The processes are a substantial part of resource management and spending, which is why they require careful strategy. In many cases, organisations will have Chief Procurement Officers, dedicated accounts, and a range of other professionals who work to deliver cost-savings and ensure compliance with all relevant regulations.

The procurement processes can be split into direct and indirect matters, with the former relating to items directly linked to the products sold by the company. Raw materials are a good example. Conversely, procurement of indirect materials relates to the purchase of items like office supplies and other goods needed to run the business but aren’t directly linked to the products.

Procurement is an essential feature of supply chain management and will subsequently enable organisations to track spending, understand their expenses, streamline production processes, and develop data-backed pricing strategies. The guidance can be in the best interest of workers, managers, suppliers, and customers alike. Crucially, if this aspect of the operation is not under control, the entire business model falls flat.

For large organisations, a centralised operation can consolidate performance measurement and centralise deals with major suppliers while simultaneously promoting better communication and smoother contingency plans.

Given that poor communication costs large organisations an estimated $62.4 million per year, smart procurement practices are essential.

How has this role changed in the last 10-15 years?

The Rise of Corporate Procurement

The world has dramatically changed in the past 15 years, and procurement within business landscapes is no different. Tech advancements, alongside changing mindsets from businesses and consumers, have resulted in a far greater emphasis on data analysis. Not least because it can remove the guesswork to optimise efficiency of time and money.

Procurement has been a catalyst for helping businesses, especially large organisations, move away from the ‘self-sustainability’ model to a collaborative one in which the importance of suppliers for reaching business objectives is now truly recognised. Supplier relationship management has become an integral feature, with many organisations using dedicated tools to stay ahead of the game in an increasingly dynamic environment.

Given the importance of procurement in business, especially at a large scale, it has to set the tone for adapting to changing environments. In recent years, greener operations have been a big talking point with over 80% of consumers wanting to work with eco-friendly companies. The procurement and delivery of products in an environmentally friendly fashion is vital.

Furthermore, procurement managers gained many valuable lessons during the pandemic. It had many impacts on supply chain management while it also highlighted the fact that companies cannot afford to rely on just a small number of vendors. Even in May 2022, 19% of businesses had to find alternative solutions or were unable to procure items from within the UK. The demand for quick business has never been greater and, in many ways, procurement is the start of it all.

In recent years, greener operations have been a big talking point with over 80% of consumers wanting to work with eco-friendly companies.

What might be its role in the future?

One of the biggest developments in the realm of procurement relates to the increasing demand for AI and automation. The benefits of machine learning have been seen in an extensive range of business landscapes and it has been forecast that over half of all procurement will be AI-led within the next five years.

Turning to augmented procurement platforms like Procure Ai will continue to drive time-efficient and cost-effective solutions that are supported by automated data analysis capable of transforming the way big corporations handle procurement for individual locations and organisation-wide protocols alike.

Moreover, the agile solutions will offer even more seamless integration with other departments to provide the catalyst for ongoing growth and spending efficiency.