Setting Up Procurement Policy (and Priorities) in Smaller Companies: Where to Begin

A recent article in Supply Chain Digest tackled – well quoted – a subject that often gets short shrift inside smaller organizations and the middle market: how to set up and prioritize procurement investments. Citing an article from Redactive’s Supply Business, the piece quotes Dave Nellist, who serves as procurement head for a New Zealand-based insurance firm, and shares his views on improving procurement’s stature on in the SMB market.

Nellist argues that a number of elements should be included in this middle-market procurement framework including a “procurement code of ethics [policy], gifts and hospitality policy, delegated authorities, procurement risk and fraud management procedures, a supplier due diligence process, sourcing guidelines, supplier relationship and performance management procedures, preferred supplier protocols and a definition of procurement’s role in corporate social responsibility and sustainable procurement.”

What’s curious about this is how much procurement’s role in smaller organization is about policy and influence, and less about “doing.” SMB organizations simply don’t have enough time on their hands to get the job of purchasing done by themselves.

As I wrote in an invited paper for Deem, a provider targeting the middle market in procurement:

“The key is making it easier for everyone who makes individual or company purchasing decisions that help the bottom line rather than simply continuing with previous behavior. In this battle to elevate the role of finance and procurement together while simultaneously encouraging better purchasing behaviors at the employee level, companies have a number of new allies that can help them win the war on cost. Most important of all are new technologies – many of which have only gone mainstream in recent years – that can help with overall visibility, control, accountability, transparency, and simplifying the spending lives of employees.”

So when SMB procurement triage is required, think policy and influence (and leverage through technology) before everything else!

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