A business that focuses on producing goods or providing services should have a procurement department. A procurement head gives and plans out a procurement strategy that will make the company successful.
The strategies that should be included with the procurement process should be effective enough to make sure that the company will save as much money as they need and make use of money for improving other processes and departments of the company.
With the responsibilities of department heads, their subordinates will be following the strategy that they will make that will lead for the success of the business.
When it comes to procurement strategy, it is important that the procurement department heads are aware of what they should be considering to attain success in their business.
They should know how they go along with the financial department of the company and make sure that the strategies created are effective enough to promote cost savings.
Due to the fact that many companies nowadays are focused on the improvement of their products and services, it is important that they are always considering the strategies that they should be practicing within the company.
Say, for example, a company is producing baked goods in large quantities and the dry goods are ordered weekly to ensure its freshness.
To maintain the freshness of the dry goods, it is not cost effective if the company will order a quantity that is good for 2 or 3 weeks.
The company will be experiencing difficulties in regards with the area where they can store these and may affect its freshness. With this example, the procurement strategy is wrong and should be changed to ensure that the company will still meet the quantity that they produce weekly while maintaining its quality.
To change the procurement strategy, it is important that the heads of the department will consider the results of the strategy that they want to pursue.
In the said example, the company will be forced to spend more than what they supposed to due to the fact that they may encounter problems in regards with the quality of the product.
This may be because the dry goods are not fresh enough to produce quality baked goods and may not be stored properly that causes it not to be processed under the right preservation of its freshness.
The procurement department should not be focusing only to saving money, even if, it is their purpose for the job. He or she should also consider if the company will still receive the right quantity and quality where their company is known for without spending more than what they have allotted for the production.
Adjustments should be done in a particular procurement strategy and being able to get the right combination of ideas will lead to a more successful production than what they had before.
The company will be benefited with the wise decision of the department head, and the subordinates are confident with the strategy that they are practicing within the company’s processes.