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"Exploring the suppliers' market and finding suppliers who deliver more profitability."
In the last two decades, many retail companies changed the role of Buyers into Category Managers. However, it is not about changing the name, but about an alternative approach; creating a new negotiation position. Buyers want to do quick business and most times they want to deal with the suppliers who they already know which in turn translates into the company losing money by not buying at the right purchase price. A well-educated Category Manager however tries to apply Procurement, but procurement takes time. Large sized companies accommodate a dedicated Procurement department most times depending on their strategic choices and how the function of purchase has been organized. As a result, Procurement is linked most times with the Private Label strategy of the company.
Let's explain first the meaning of procurement, and then the difference between procurement and buying. Procurement encompasses sourcing activities, such as market research, evaluating vendors and products, negotiating, contracting, purchasing the goods, gathering, managing and passing through the master data, and transferring the agreements into the supply chain processes. Consequently, procurement is more than just buying; it contains a much wider scope. It is more profound, and it is the precursor to Category Management.
We can put Procurement also in the following headlines:
exploring, mapping and sourcing the suppliers market, national and international;
negotiating, contracting and acquiring the goods (or materials and services);
building and developing the assortment, taking into account the principles of Category Management;
developing/ improving the supply chain and taking out "middle-men";
creating value for the company.
On the long run, procurement can save a lot of money by knowing the potentials of the market a lot better, by taking out distributors and other agents and by finding the right manufacturer who can produce the same or similar SKU(s) for a better price.
However, for some companies, it is much more convenient to purchase a ready-to-sell private label assortment. This means no long procurement and Private Label development processes, but just buying (a part of) the assortment at a providing organisation. This can be a large scaled retailer (abroad) who already developed the Private Label for themselves and who is open to trade it, or an international "common buying organisation".
We can help growing discount retail companies in this transformation process from Buying to Procurement. We can also guide you to Private Label traders who already developed a complete Private Label assortment.
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