Why do you need business case for procurement?

In many organizations where procurement is generally about office supplies, repairs, maintenance and routine buying, these activities are taken care of by the office administration team. At times, procurement is done on an urgent basis and many times buying is done on an adhoc basis.

Naturally this results in loss of savings as the team does not get time to think on many aspects that could have enhanced the buying process. In overall, the procurement team needs to have time and resources that help them in evolving a business case for each component of the buying activity.

When business leaders allow their procurement teams to focus on business case for any procurement activities, it automatically drives them towards a point wherein they are needed to analyze the available choices and take the best-possible decisions basis the quality and cost related aspects.

In fact, by asking all your teams to make a business case before putting a requisition for any product or service from external suppliers, you can instill a culture wherein people need to think rationally and make the best use of available resources. It is often seen that within an organization, teams take decisions in spur of the moment and later on the resources are not utilized at all.

If your teams are asked to present a business case, they will make sure that the materials they are going to buy are going to be useful for a longer term. If it is just about fulfilling needs for a short period of time, then it is many times better to outsource it. Sample this: a team requires high-speed colour printing for a particular assignment.
Here you have three choices:
1) buy the high-speed colour printer
2) hire a colour printer for some time
3) outsource it completely to a printing agency.

In order to determine which option works the best for you, you need to have a business case covering the volume of work, utilization, investment required, expected maintenance expenditure, savings and benefits.

Analyzing procurement this way may appear to be daunting to your teams initially but once this becomes a part of your oganization’s system, then it becomes in tremendous benefits. To make it simpler, you can get a template developed for this purpose.

HASHTAGS
#supplychain #procurement #SCM #automation #businesstransformation #efficiency #bestpractice #digitization #outsourcing #procurementchallenges

Author – Aval Sethi, Founder

Aval Sethi is the founder & CEO of ProTaiga and is based in New Delhi, India. As a result driven entrepreneur, Aval leads Business Transformation and Procurement Automation initiatives focusing on new-age innovation for businesses through his company.

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