Want to be "the early bird that gets the worm"? Get your procurement team involved early in any project for significant cost savings, improved supplier relationships, and overall project success.
Let's explore the key reasons why early procurement involvement is beneficial for your company.
12 important reasons for procurement's early involvement
Procurement teams acquire goods, services, or works from external sources—including inputs for the manufacturing process. They often have critical information that other departments don't.
Here are 12 reasons why it just makes sense to bring your procurement team in early.
1. Resource planning
Resource planning is essential for any project, and having procurement involved early can help ensure that resources, including time and money, are allocated effectively. By collaborating with procurement from the outset, companies can develop comprehensive resource plans that align with project goals and budget constraints.
2. Raise red flags early
Identifying potential issues or risky situations early on and addressing them proactively can minimize any negative impact on the procurement process. This can involve conducting thorough risk assessments, analyzing supplier capabilities and performance, and identifying any issues. Raising these red flags early allows organizations to conduct research, make informed decisions, and take action to reduce risks, ensuring a smooth procurement process.
3. Identify cash flow concerns
By analyzing the cash flow of procurement decisions from the beginning of a project, organizations can better anticipate potential financial risks. Identifying financial concerns early lets the company take proactive measures, such as negotiating favorable payment terms with suppliers or seeking alternative financing options.
4. Apply cost controls
Applying cost controls in early procurement involvement keeps the project within budget so it can be completed successfully. When companies involve procurement in planning projects from the start, they can find ways to save money, get better prices from suppliers, and avoid unexpected costs. Get procurement involved early to save on costs and negotiate better prices.
5. Plan budgets more accurately
Early involvement in procurement helps finance and accounting teams plan budgets ahead of time. By working closely with procurement teams from the beginning, project managers can gain a better understanding of the costs involved in the acquisition of goods and services.
This early collaboration helps to identify potential cost-saving opportunities, negotiate better deals with suppliers, and ultimately create a more realistic budget for the project. When budgets are planned more accurately, it can lead to better financial management throughout the project's lifecycle.
6. Choose suppliers strategically
Procurement professionals can help companies choose suppliers strategically by conducting thorough supplier evaluations, assessing supplier capabilities, and negotiating favorable terms. Strategic supplier selection can also result in better quality products or services, improved delivery times, and stronger partnerships that can lead to long-term success.
It's important to assess the capabilities, reliability, and reputation of potential suppliers before making a final decision to ensure that they align with the goals and needs of the business.
7. Gather key insights
Early procurement involvement allows companies to gather key insights from members of the procurement team, who can provide valuable market intelligence, supplier data, and industry trends. By leveraging these insights, companies can make informed decisions, identify opportunities, and stay ahead of the competition.
8. Capture supply base opportunities
Procurement experts can help companies capture supply opportunities by proactively seeking out new suppliers, exploring alternative sourcing options, and optimizing supply chains. This early involvement also helps build better relationships with clients, gives businesses a competitive edge, and increases the likelihood of securing favorable contracts and partnerships.
9. Manage risk & compliance
Procurement professionals lend a hand in managing risk by conducting supplier assessments, monitoring performance, and ensuring regulatory compliance. Taking a proactive approach helps minimize the chances of non-compliance with regulations and standards, saving both time and resources in the long run. Early involvement also allows for better negotiation with suppliers, achieving cost savings and ensuring that the goods and services procured meet the necessary quality standards.
10. Foster cooperative innovation
Involving procurement early can help align stakeholders' interests, build trust, and foster a culture of collaboration and innovation within the organization. By involving all key players early on, teams can collaborate effectively to identify innovative solutions, streamline processes, and deliver value to customers. This approach allows for early problem-solving, improved communication, and a shared understanding of project goals, ultimately leading to more successful outcomes.
11. Speed up the product development process
It can be challenging to bring new products and services to market quickly, staying ahead of the competition and meeting the ever-changing demands of customers. Taking a proactive approach to procurement can help companies bring products to market faster, seize opportunities, and gain a competitive edge—thanks to all the advantages listed above. Raising red flags early on, identifying and solving issues, planning budgets, and getting everyone on the same page can streamline a project from start to finish.
12. Delight stakeholders
Early procurement involvement can delight stakeholders by delivering on project goals, meeting expectations, and exceeding performance metrics. By engaging all stakeholders from day one, project teams can better meet their needs and expectations. Early involvement also helps to build trust and transparency, leading to stronger relationships and, ultimately, better outcomes for all stakeholders.
Capturing these advantages with financial controls
When companies bring procurement teams and even suppliers into project planning, they can reap all the benefits listed above. But it falls to the finance and accounting team to make sure project costs line up with the plan.
Three-way matching is key—comparing both purchase orders and goods receipts to the invoices that come in from suppliers. Unfortunately, 3-way matching takes time and introduces the possibility of human error, which can gum up the works and even lead to late payments.
BILL Accounts Payable automates 3-way matching to streamline the process. PO and receipt details are synced automatically from your accounting software to BILL where they can be viewed in a single workspace.
For Myomo, makers of wearable robotics, three-way matching paired with NetSuite saves the finance team a lot of time while also boosting confidence in the numbers.
“BILL three-way matching makes my process more efficient. … When you’re trying to match data between two systems, it can introduce human error,” says Kevin Cullinan, Corporate Controller and Director of Finance. “Having BILL do it for you gives everyone more confidence that it is accurate.”
See how BILL Accounts Payable uses AI, optical character reading (OCR), and machine learning to help you apply more control in less time.
Early procurement involvement FAQ
These are just a few of the common questions that arise when considering this important aspect of project management.
What does procurement involve?
Procurement involves the strategic sourcing, negotiation, and management of goods and services to meet business objectives and support organizational goals. Procurement professionals work closely with stakeholders, suppliers, and internal teams to ensure cost-effective procurement practices and optimize supplier relationships.
What is the early supplier involvement model?
The early supplier involvement model is a procurement strategy that involves engaging suppliers early in the product development process to leverage their expertise, drive innovation, and optimize supply chain performance. By involving suppliers early on, companies can enhance product quality, reduce time to market, and achieve cost savings.