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Considering value over price in procurement and supply chain

Procurement and supply chain operatives are facing new challenges, with a shift in priority from price to value. Businesses are now willing to pay more for better products and services.

Procurement and supply chain operatives are facing new challenges, with a shift in priority from price to value. Businesses are now willing to pay more for better products and services.

There’s been a realisation that a valuable product is better than a cheaper product in the long-term. Focusing on value also aids business improvement.

Brexit is the biggest factor behind the change, as it has created a need for operatives to think smarter, rather than cheaper.

Social value is also increasingly important in business. Considering inclusivity and the environment in procurement and supply chain processes can increase the value of a company and improve its reputation.

What to consider

This change of focus also requires different skills. Procurement and supply chain professionals now need to focus on buying rather than saving, planning for the future and thinking sustainably.

Effective buying: saving is not the only concern a procurement and supply chain operative should have. Spending money more wisely – rather than spending less of it – is key.

The effectiveness of individual items can be hard to measure, so liaising with other departments and understanding their needs is important.

Social value is essential for maintaining trust and a company’s reputation, which can be severely damaged by cutting employees and environmental solutions. Trying to save money by cutting costs, to the detriment of your social value, means your company could lose business and suffer reputational damage.

Forward planning: knowing what will be most beneficial to the organisation long-term, even if it costs more, is a smart way to procure company essentials.

Brexit has caused uncertainty nationwide, including in our industry. Preparing for Brexit has required us to be prepared for any eventuality.

EU supply chain managers are losing faith in British goods. Currency fluctuations are complicating profit margins. These factors, along with general uncertainty, are already affecting UK supply chains.

Indirect benefits: businesses are taking social value, the environment and ethics into consideration, rather than just short-term financial benefits.

Greater trust creates more business and enhances reputation; improving a company’s financial performance.

With more ‘valuable’ products and services on offer, a business can become more transparent and trustworthy to clients and consumers.

Companies with social value can maintain trust and their reputation by taking steps to be more socially aware, including working with others who are ethically conscious.

What does this mean for the sector?

Operatives should be more focused on finding equipment or employees who can add value to the company, directly and indirectly.

A simple action can improve a company’s reputation and relationships between clients, rather than just for direct monetary gain.

Previously, procurement operatives would make cuts to staff and their budgets – losing necessary people and elements of the company – to the detriment of a business and its ‘value’.

Now, that value has to be the main consideration for procurement and supply chain professionals, not just simply selecting the lowest possible price.

To find your next role in procurement and supply chain, or employ a talented candidate in your area, find your nearest Reed Procurement and Supply Chain branch.

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