Wisdom From Procurement

I’ve come to love procurement over the years — which may seem like an odd fixation. It’s often an underutilized function, much like design, and so I look to it as a kind of analogue in a way. Here are a few notes I’ve held on, in case the topic interests you like it does for me.

Success! You're on the list.

A Saying

An expense dollar is equivalent to 10 sales dollars.

–Old Procurement Saying

The point being made is that your marketing/sales spend goes far, but if a procurement-led savings can do your organization a lot of good, too.

A Tradeoff

Chasing market share and revenue versus chasing profitability.

–Old Procurement Tradeof

The point being made is that it sounds cooler to go for growth instead of considering how savings can ultimately achieve greater margins–which is ultimately better for your company.

A Deal

Take an asking price of $3M and turn it around as $1.5M (now) with incentives for using the product/service so that an extra $2M gets gained in the long run by the supplier.

–Old Procurement Trick

The point being that you can reduce the price in the now with the assumption that you’re paying and exceeding the original asking price if it does what they say it could.

Caveat: Be careful when the seller side determines that their desired margin for the $1.5M (now) as sufficient by scaling down the efficacy of the actual product/service so it never reaps the total $3M of value you think you might be getting.