Unlocking Procurement Value with the Hierarchy of Procurement Needs

Procurement, like any business department, has an array of needs that must be met. Some basic needs are met by nature of a business’s function, but other needs won’t come until until procurement’s value is proved to leaders and key stakeholders.

In the popular hierarchy of needs from psychologist Abraham Maslow, we discover a human’s basic needs for health and safety. In the model, the most necessary building blocks are at the bottom of the procurement pyramid creating a stable foundation. As you fulfill those basic needs, you’re enabled to meet “higher” needs and move up the pyramid.

Similar to Maslow’s model, we’ve created a hierarchy of procurement needs. In a company with focused leadership, a procurement department that does a phenomenal job managing transactions is more likely to be asked to help at the higher tiers of procurement such as sourcing, supplier management, and the company’s financial or diversity strategy.

 It’s at these upper levels where greater opportunities can be unlocked for procurement — enabling the department to save the business significant time and money. However, without first meeting the business’s basic procurement needs, those upper channels cannot be unlocked.

Prove Procurement’s Value from the Bottom Up

The most basic responsibility of a procurement team is to manage a company’s transactions. If your team is struggling to effectively or efficiently manage transactions and keep a high percentage of spend under management, you’ll need to solve that issue before considering other ways your team can show the value of procurement.

One way you can improve your spend management is with a centralized platform to store and track all purchases. By keeping all of your data and processes in one place, you’ll find greater visibility, quicker turnaround, and a better internal reputation will follow.

If your team has a smooth transaction management process and high spend under management, you can begin looking at less foundational procurement responsibilities.

Build Trust as you Climb the Hierarchy of Procurement Needs

When you begin by focusing on the most foundational principles of procurement, such as managing transactions, you’re able to implement systems and processes that make completing those tasks seamless and efficient. When you do this, you’ll begin to build trust within your company and establish the value of procurement. Soon, your department will be the one people look to for help rather than a step they must check off along the way. 

That means you’re ready to take on more responsibility. It’s important that as you grow and take on “higher” principles of procurement, such as sourcing and contract negotiation, you continue with the same intentionality you started with. 

If you ensure that your team continues to implement efficient processes and keep their processes visible, the trust you’ve built at the company will only grow. 

Find Greater Opportunities to Unlock Procurement Value

As you prove procurement value and build trust, you’ll soon find doors opening for your team that you may not have considered yourself, like access and influence to participate in the company’s most important decisions. A procurement team with a solid foundation will be able to properly handle these greater opportunities and in turn, provide even greater value to their business. 

Once procurement builds enough trust to be included in those higher discussions and decisions, they’re in a strong position not only to help save on costs but also to bring ideas that help all employees do their jobs more easily and efficiently. 

Drive Savings from the Top to Boost Procurement Value Further

The greatest opportunity for establishing the value of procurement is to utilize the entire pyramid of the Hierarchy of Procurement Needs. Perhaps a procurement expert is able to save a small percentage at the individual transaction level. But by working with designers and suppliers from the start of a new initiative, it’s possible to develop products and engineer supply chains in integrated ways that drive even greater efficiency and cost savings. 

Of course, the most developed procurement teams will be able to create strategies and processes that allow them to succeed at every level of the pyramid. However, this begins with a well-thought-out and properly executed foundation.

Prove Procurement Value and Unlock New Opportunities with Graphite

Graphite is a platform that allows procurement teams to create efficient and effective processes beginning with supplier onboarding. Build trust in your company and prove procurement’s value by centralizing your purchasing and supplier intake and creating more visibility into the entire procurement process.