Johnson Procurement Solutions - Improving profitability through smarter procurement
Procurement can be traced all the way back to the Egyptians in 3,000 BC. Although there was no specific procurement function, materials management aided the building of the pyramids and the Egyptians used scribes to manage the supply for these colossal projects.
In their clerical role, scribes recorded on papyrus rolls the amounts of materials and workers required. Orders would be tracked through fulfilment and therefore the Egyptian scribes were one of the first known in history to be in the procurement profession.
Fast forward 5,000 years and procurement takes a very different form. You might be surprised to learn that procurement, in its real meaning, didn’t exist until around 20 years ago…
The 1980s saw a significant increase in supplier competition, which meant that organisations had the luxury of being able to challenge their suppliers’ quality and dependability. Supplier management became an important factor in procurement and remains so to this day. By the late 1990s, the role of procurement had begun its transition into strategic sourcing; procurement professionals viewed their suppliers as partners and long-term contracts with terms that favoured all parties were encouraged.
This was the beginning of procurement’s modern-day evolution. Before this period of change, organisations had been purchasing rather than procuring. So, what’s
the difference? The main difference between purchasing and procurement is that Procurement includes all activities of & supplier relationship management while purchasing is just a part of SRM.
Procurement includes designing, sourcing, processing, negotiating and fixing standards, whereas purchasing or buying is a simple concise term that incorporates giving money for a particular goods or product.
Today, procurement professionals are instrumental to the success of an organisation. They are responsible for the development and evaluation of relationships with qualified suppliers, and everything in between. Ultimately, procurement has a significant impact on an organisation’s bottom line, and subsequently the business’ growth, which has earned its place at the management roundtable. In the 1960s, a CPO (Chief Procurement Officer) was unheard of; today, we see more and more that procurement directors are helping their organisation to develop and reach strategic and operational goals.
Despite this significant and valuable evolution, we have found that, despite it being 2019, many SMEs are still purchasing like the Egyptian scribes rather than procuring as they could (and should). There are many reasons for this, but the main culprit is lack of time. Organisations, particularly ones on the lower end of the SME scale, simply do not have the time to devote to going out to market, challenging suppliers and strengthening their buying power.
Our founder and managing director, Steve Johnson, has a wealth of knowledge and experience of strategic procurement practices thanks to his lengthy career in procurement for major plc organisations. In 2016, he made it his mission to support SMEs in need of his expertise and established Johnson Procurement Solutions Limited. Three years later, the company is a team of procurement professionals that support organisations to achieve significant cost savings that enable them to not only survive but grow in the current economic climate.
From P2P (Purchase to Pay) support to comprehensive strategic transformations, we have a range a procurement services suitable for all kinds of SME. For more information, please get in touch with us…