Navigating the Procurement Iceberg

By- Prateek Kumar

The procurement management iceberg is a great analogy to depict the many unseen aspects of this crucial business function. Just like an iceberg, what you see on the surface (the tip) is just a small fraction of the entire process.

The tip of the iceberg, the most visible part of procurement, usually involves tasks like:

• Issuing purchase orders
• Receiving and processing invoices
• Managing supplier relationships

However, beneath the surface lies a much larger and more complex world of procurement activities. These include:

• Strategic sourcing: Identifying and qualifying potential suppliers, negotiating contracts, and managing supplier relationships.
• Risk management: Assessing and mitigating risks associated with the procurement process, such as supplier insolvency or quality issues.
• Contract management: Ensuring that contracts are properly negotiated, executed, and monitored.
• Sustainability: Considering environmental and social factors in the procurement process.
• Spend analysis: Identifying and analyzing spending patterns to identify cost savings opportunities.
• Innovation management: Working with suppliers to develop new products and services.

By understanding the entire procurement iceberg, businesses can improve their efficiency, reduce costs, and mitigate risks.