Why should procurement training for your staff be on your to-do list? As a general rule, the more effort you put into personal development, the better its output will be. If you don’t train someone to be able to undertake a task or compete in a sport, you’re not going to get the most out of them, even if they have natural talent.
This can present a challenge in your business, particularly if you have restricted budgets. The training and development of your team is often the first thing to get cut. Although this may appear to provide some initial monetary freedom, your company will suffer in the long run.
It’s damaging to your organisation:
- Employees and the business don’t get that chance to improve.
- Employees lose commitment because they don’t feel invested in.
- Neglecting workers development introduces risk. This mistake occurs when businesses fail to realise the consequences of this neglect.
Don’t take our word for it. 51% of procurement leaders believe their current teams do not have sufficient levels of skills and capabilities to deliver on their procurement strategy. Proper training is paramount to effective procurement teams, but there’s a serious lack of investment. In 2015 29.5% of businesses spent less than 1% on training budgets.
It’s not that businesses don’t want the benefits, a recent study showed that survey respondents hoped for a future with less process, more insight, more seamless engagement and demonstrable results.
We believe that getting the right employees and then training them goes hand in hand. It’s a continuous process, one which should see your ROI increase over time. Investing in procurement training is a great way to create ROI from process improvements, less time spent rectifying errors, smart investments and higher levels of staff engagement.
How does this matter to procurement?
Spending in business is not like domestic purchasing. Procurement tends to be affected by and affects other parts of the company. Its impact is dependent on how well it’s thought through. There are so many factors surrounding purchasing choices, making buying in business so much more complex and impactful than in everyday domestic life.
What is the procurement process?
A procurement process is a list of steps that you should follow while reviewing, ordering, obtaining and paying for goods/ services. It starts from the moment certain products are identified as necessary and ends with record keeping.
These rules increase the complexity of a business’s purchasing process.
What is category management?
Category management is a process that enables businesses to better manage and reduce the cost of procurement by identifying and focussing on what a business really needs. It means buying more effectively which means the bottom line is enhanced.
Imagine that every member of your company is responsible for sourcing one item each. The likelihood is that there would not be enough communication for each employee to be clear on what the other employees bought and spent. This is likely to increase Procurement costs.
However, if one member of your company were in charge of sourcing all the business’s necessities, that person would understand the overall cost, they could group similar items and look for cost-cutting opportunities.
Category management is the process of identifying all products essential to the company’s procurement, grouping similar products and adopting a consistent approach to buying them. This generally reduces the costs, risks and boosts efficiency.
What category management process should I use?
Although there are various ways to approach category management, there’s a recognised category management process that is the bread and butter of good procurement.
- Challenge the business on what their idealised wishlist is vs what they actually need in terms of goods and services.
- Identify what the supplier market is. Where can we get the business’s essential items? What drives the cost? How do we get access to it? What supplier can get it to us?
Armed with that information, good procurement teams can drive a competitive market and purchase through the right supplier.
Agreeing on commercial terms and engaging your supplier in an appropriate contract comes with the benefit of building a deeper relationship with your suppliers, which will help your products and the building of your business over time.
Reducing risk through staff training:
The problem is, when you recruit people to become buyers and category managers, a buyer at one company might have a different skillset from a buyer or category manager at another. A challenge in the business is to make sure that the team is thoroughly trained in the category management process, ensuring there’s a wide range in skills and collaboration is more straightforward.
If you do it well, you’re going to give yourself the maximum opportunity:
- You’ll get what you need.
- You’ll get good value.
- You won’t introduce risk to your business.
- You’ll have access to critical suppliers for future innovation.
Remember that investing in your staff will also reduce the risk of them leaving your organisation. 70% of high-retention-risk employees say they’ll have to leave their organisation to advance their career. Training them will make them feel like their personal development is taken seriously and valued by your business.
Get the most out of your team:
We believe that the best way to get the most out of a procurement team is to work on a current problem. Take a procurement challenge and train them end-to-end in the category management skill set. They’ll then be able to apply their procurement training to active problems.
- You know you’re getting a team that knows how to execute category management.
- You’re solving a real problem.
- They’ll have built the capabilities to tackle future issues with the skills they have developed.
In our experience, our company received an immediate ROI through savings that far outway the cost of procurement training.
For example, we worked with a manufacturing company who were looking to find a new mobile phone supplier. Through training the team, they were able to identify a new supplier that offered the equipment they wanted with the bonus of the inclusion of additional services. They also managed to dispose of stockpile phones, which returned cash to the business and absolved a significant information risk from the phones that hadn’t been reset.
The level of staff training and potential cost-cutting through effective procurement are amalgamated. The investment in staff development will see an ROI that will continue to grow through time. Do the right thing for your business by utilising the potential of your team.