9 Incredible Powers of Procurement Professionals, That Are Grossly Underutilized

Procurement professionals have a direct impact on an organization’s bottom line, shaping not only cost structures but also innovation, efficiency, and compliance. Despite their pivotal role, many of their core skills remain underleveraged. In this article, we explore nine powerful capabilities of procurement experts that are often overlooked but can significantly transform organizational success.

1. Strategic Negotiation Skills

Procurement professionals are master negotiators, trained not only to get the best prices but also to secure favourable terms and quality assurance. They can negotiate beyond just cost, including aspects like warranties, after-sales service, faster delivery, and better payment terms. However, organizations often limit negotiations solely to price reduction, failing to tap into other valuable benefits such as longer-term partnerships or improved service levels. Expanding negotiation objectives beyond price to include quality, delivery reliability, and innovation potential can help achieve significant gains.

For instance, Nestlé India renegotiated its packaging contracts in 2022, securing longer credit terms and faster delivery schedules during the monsoon season, thereby reducing downtime by 20%. This was possible due to strategic negotiations that focused on holistic benefits rather than merely price cuts.

• Key Learning: Expand negotiation objectives beyond cost reduction to include terms like delivery speed, service reliability, and extended warranties.

2. Market Intelligence Gathering

Procurement professionals interact daily with suppliers, gaining a deep understanding of market trends, pricing dynamics, and competitive landscapes. They possess insights into cost drivers, emerging suppliers, and innovation trends within their categories. This intelligence can be leveraged not just for purchasing but also for strategic planning, risk management, and even new product development. Unfortunately, these insights are often siloed within the procurement function, rather than shared across departments to drive overall strategy.

In 2023, Mahindra & Mahindra leveraged procurement intelligence to understand global steel price trends. By forecasting a potential spike, they strategically increased their steel inventory, saving ₹150 crores in raw material costs as prices surged globally.

• Key Learning: Encourage cross-functional sharing of procurement insights to drive better decision-making across departments like production, R&D, and finance.

  
  

3. Risk Mitigation

Procurement professionals are trained to identify and mitigate risks, ranging from supply disruptions and geopolitical uncertainties to compliance risks and natural disasters. They create contingency plans, such as identifying alternate suppliers or diversifying sourcing regions. However, many organizations only involve procurement when a crisis has already struck, instead of leveraging their risk assessment skills as a proactive measure.

In 2020, Procter & Gamble (P&G) implemented a dual-sourcing strategy for critical raw materials during the pandemic, enabling them to maintain consistent production while many competitors faced supply chain disruptions. Procurement’s early risk identification and supplier diversification prevented shortages, even when a major Chinese supplier faced lockdowns.

• Key Learning: Proactively involve procurement in risk management planning to enhance resilience against supply chain shocks.

  
  

4. Supplier Relationship Management

Strong relationships with suppliers do more than just secure better prices; they lead to improved quality, faster delivery, and even collaborative innovation. Procurement professionals excel at turning suppliers into strategic partners through effective communication, trust-building, and long-term agreements. Unfortunately, many companies treat suppliers as mere vendors, missing out on potential innovation and efficiency gains.

In 2021, Hindustan Unilever collaborated with its suppliers to reduce the environmental impact of its detergent packaging. This partnership led to the development of biodegradable packaging, reducing waste by 15% and saving costs.

• Key Learning: Encourage long-term partnerships with key suppliers to promote the co-development of products, sustainability initiatives, and process innovations.

  
  

5. Data-Driven Decision-Making

Procurement professionals often have access to vast amounts of purchasing data, which can be used to identify patterns, inefficiencies, and opportunities for cost savings. By analyzing this data, they can forecast demand, optimize inventory, and implement data-backed sourcing strategies. However, in many organizations, this data remains underutilized, limiting the potential for strategic, data-driven improvements.

Amazon India used procurement data to analyze supplier performance in 2022, identifying slow-moving vendors and reallocating spending to high-performing suppliers. This resulted in a 12% reduction in delivery times and improved product availability during peak seasons.

• Key Learning: Invest in data analytics tools for procurement teams to enable effective spend analysis, supplier performance evaluation, and cost optimization.

  
  

6. Cost-Saving Beyond Price

The focus of procurement is not just on negotiating lower prices; it’s about reducing the total cost of ownership (TCO). Procurement professionals identify cost-saving opportunities in logistics, storage, payment terms, and supplier efficiencies. This includes reducing inventory costs, minimizing wastage, and streamlining processes. However, organizations often overlook these broader cost-saving strategies and focus solely on unit price reductions.

In 2021, ITC Limited restructured its logistics contracts to allow shared freight services with suppliers. This innovation cut logistics costs by 10% while reducing delivery time by 18%.

• Key Learning: Focus on reducing the total cost of ownership (TCO) by optimizing logistics, warehousing, and inventory management, beyond just negotiating lower unit prices.

  
  

7. Compliance and Ethical Sourcing

Procurement professionals ensure compliance with labour laws, environmental regulations, and ethical sourcing standards. They are well-positioned to enforce sustainable and responsible sourcing, aligning procurement strategies with the organization’s ESG (Environmental, Social, and Governance) goals. Despite this critical capability, compliance and ethical sourcing are often seen as secondary tasks, with organizations failing to utilize procurement’s potential to protect the brand’s reputation and ensure sustainability.

In 2022, Tata Motors partnered with ethical mining companies to source responsibly mined aluminium, aligning with the company’s ESG commitments. This helped secure regulatory approvals and enhanced the brand’s image as a sustainable automotive leader.

• Key Learning: Align procurement strategies with ESG goals by prioritizing ethical sourcing and compliance to protect brand reputation and ensure regulatory compliance.

  
  

8. Driving Innovation

Procurement teams can act as innovation catalysts by engaging with suppliers to co-develop new products, materials, or processes. By actively collaborating with suppliers, procurement can bring innovative solutions that improve product quality, reduce costs, or increase speed to market. However, many organizations still view procurement as a cost-control function, not as a strategic partner in product development.

Godrej Consumer Products co-developed a new formulation for insect repellents with a key supplier in 2023, resulting in a product that was 20% more effective while reducing production costs by 15%. Procurement’s role in this co-creation process helped the brand launch a superior product ahead of competitors.

• Key Learning: Leverage supplier relationships to co-create new products, materials, or processes that can enhance product quality, reduce costs, or increase speed to market.

  
  

9. Strategic Influence Across the Organization

Procurement professionals hold a strategic position within organizations, capable of influencing a wide array of decisions, from product design and pricing to market entry strategies and sustainability initiatives. Yet, they are often excluded from key strategic discussions. Integrating procurement into these conversations can provide strategic advantages, such as competitive pricing, market intelligence, and innovation sourcing.

In 2023, Infosys integrated procurement into its strategic planning sessions, resulting in a new policy for sustainable sourcing of IT hardware. This led to cost reductions and compliance with international green sourcing standards.

• Key Learning: Include procurement in strategic discussions, enabling them to contribute insights on cost-effective solutions, market dynamics, and supplier innovations that can benefit the organization as a whole.

  
  

Conclusion

The potential of procurement professionals goes far beyond cost savings. By recognizing and utilizing these nine powers, organizations can turn procurement into a strategic force that drives growth, innovation, and sustainability. It’s time for organizations to tap into these underutilized strengths and transform procurement from a cost centre into a value-creating powerhouse.

If you’re ready to maximize the potential of your procurement team, start by involving them in strategic planning, encouraging data-driven decisions, and promoting ethical sourcing. Unlock the full power of procurement, and watch your organization thrive!