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Starting a business is never easy, especially seeing as federal regulations get stricter in conjunction with worsening climate change – meaning that imperative business decisions such as procurement often gets left on the back burner.
Procurement is one of the most imperative steps to cultivating a more sustainable supply chain and ensuring your company can stay ahead of the future climate legislation – buy why?
In this article, we’ll review what procurement is, why it’s important, and 3 mistakes your company should try to avoid during the procurement process.
Procurement refers to the process of securing or purchasing various goods or services, usually for business endeavors.
Think of a restaurant seeking to purchase food, table clothes, tables, chairs, and TVs for their place – the effort to acquire all of these items can fall under procurement.
👉 Essentially, next to no business can operate without practicing procurement – seeing as t-shirt can’t be made without raw materials the same way a laptop cannot be made without batteries, metals, and other spare parts.
Anyone seeking to operate or open a business will have to keep procurement in mind.
As a result, many companies end up developing what is known as a procurement process – which refers to the steps and decisions considered before a final purchase is decided on. The actions taken before, during, and after procurement often require the expertise, experience, and assistance across several departments in a company.
Procurement in business usually involves the following steps:
👉 In a sense, procurement is responsible for the baseline of all businesses and their sustainability – seeing as a clothing brand can’t be eco-friendly without sustainable materials and a laptop cannot reduce its emissions without careful procurement planning.
An effective procurement process and a sustainable supply chain is imperative for companies that want to tackle the root of their emissions and encourage greater sustainability.
Therefore, unbeknownst to many, procurement is vital as the world grapples with the effect of climate change – especially as markets continue to change in the midst of this global crisis.
Here are just a few reasons why procurement is more important than ever before given the current battle against global warming:
Companies that make an effort to implement sustainable procurement practices will directly help to stop climate change on a global scale, as this often means cultivating a more sustainable supply chain.
In addition to this, companies can prevent greenwashing, benefit from reduced business costs, and even reap the rewards of curating a better brand reputation.
👉 Ultimately, procurement plays an essential role in mitigating climate change seeing as procurement has an undeniable impact on a company’s supply chain, adhering to stakeholder expectations, and ensuring that all environmental regulations are being met.
Some of the effects of a poor procurement system may include bad PR, a loss of revenue, decrease in profitability, and an overall bad reputation.
However, the biggest tell-tale sign of a poor procurement system is when a company is losing money – which is often a result of superfluous purchases.
Additional signs of a poor procurement system may include:
👉 A poor procurement system can ultimately lead to the beginning of the end for even the most successful companies, seeing as much of a company’s budgeting matters and overall finances must align with their procurement process.
There are numerous mistakes companies should do their best to mitigate when it comes to procurement, but here are our top 3 errors we’d advise you to avoid when perfecting your procurement process.
Money is an important tool for companies that want to grow, but it’s also an important factor in any procurement process.
However, many companies still fall subject to overspending when seeking to procure supplies or materials for their products and services.
As a result, this can mean the company exceeds their budget, runs out of funds to feed other businesses ventures, and acquires excess supplies that in turn creates unnecessary waste.
It’s important for companies to keep track of their inventory to ensure excess purchases aren’t made and that funds aren’t depleted under avoidable circumstances.
Much of cultivating a successful procurement process is contingent on creating a competent team of suppliers.
Many companies that have poor communication with their suppliers often struggle to establish a functional procurement process.
This is because suppliers serve as the ultimate source for understanding how to find the best available products at the most optimal prices. Therefore, it’s important for companies to carefully cultivate their supply chain – as this sets up a base to create a successful procurement process.
👉 Keeping up good communication with your suppliers could give your company access to exclusive deals, and in turn – help the business to save money while still procuring sustainable materials and supplies.
Oftentimes, our most catastrophic consequences are a result of failing to think critically about our choices – and this concept is more than true when it comes to procurement.
This is because making impulsive decisions on your purchases can create bigger headaches later down the road. It's important to stick to a schedule, but it’s also important to ensure that all employees understand how purchasing decisions should be made.
Meeting harsh deadlines should not compromise thorough and careful planning in a procurement process.
👉 In addition to this, many companies will fail to negotiate pricing as a result of trying to secure supplies or meet a deadline – which is another colossal mistake to avoid in procurement.
Even if the procurement process seems challenging, the good news is that there are several solutions to ensure a company can develop a good procurement strategy.
Here are some ways your company can overcome the challenges of procurement:
Procurement is an integral part of success for any business, and while it can prove challenging – we know it’s possible for your company to develop the procurement process of your dreams.
If reading this article on 3 mistakes to avoid procurement has made you interested in reducing your carbon emissions to further fight against climate change – Greenly can help you!
Keeping track of all the necessary business tactics that could impact your sustainability such as sustainable procurement can be challenging, but don’t worry – Greenly is here to help. Click here to schedule a demo to see how Greenly can help you comply with all of the upcoming regulations relevant to your company.
Greenly can help you make an environmental change for the better, starting with a carbon footprint assessment to know how much carbon emissions your company produces.