The Procurement function is considered a core unit in both manufacturing and service businesses. Effective procurement management significantly enhances a company’s competitiveness through cost reduction, differentiation, and better customer or consumer responsiveness. As a result, procurement is recognized as a critical component within logistics and supply chain management, and it is classified as one of the six primary process groups in the SCOR model, under the Source category.

In traditional business environments, many expenses are difficult to reduce because they rely on external factors, such as:

– Profit – Profit is derived from sales volume and margin, both of which are difficult to increase in highly competitive markets with many similar products.

– Other operating costs – These are also hard to manage, as they depend on external conditions, such as labor costs, administrative expenses, and transportation fees.

– Input supply costs – This area is much easier to improve; effective procurement planning can immediately increase profitability simply by reducing purchasing costs.

Given these relationships, executives must pay close attention to procurement operations because they directly contribute to organizational profitability. Furthermore, procurement ensures the continuity of business operations—issues with even a single supplier can disrupt the entire logistics and supply chain. Today, the procurement function should embrace the following 10 key missions:

1. Strengthen internal and external relationships

Procurement must coordinate effectively with internal departments and external partners to build a positive, professional image. The role should shift from enforcing rules to acting as a consultant and facilitator who supports seamless sourcing activities across all functions.

2. Reduce costs ethically and sustainably

Procurement must find ways to reduce expenses by sourcing high-quality materials at competitive prices—not by pressuring suppliers unfairly. Supplier performance, especially delivery reliability, should also be considered alongside cost.

3. Focus on supplier performance excellence

Procurement should evaluate suppliers using criteria such as:

– Better performance

– Cheaper cost

– Faster delivery

– More reliability
to ensure long-term quality and stability.

4. Understand the cost impact of procurement behaviors

Urgent orders, lack of long-term planning, and changes in delivery schedules all create costs that will eventually be passed back to the buyer. Procurement must recognize and minimize these behaviors.

5. Apply sourcing strategy tools

Tools such as the Supply Positioning Model can help segment products and services and determine appropriate sourcing strategies. Procurement should also use the Supplier Preferencing Model to understand how suppliers perceive the company—evaluating factors such as reputation, order volume, payment practices, and relationship quality.

6. Use marketing concepts to enhance procurement strategy

Procurement should adopt marketing tools like the Market Management Matrix to identify which suppliers should become strategic partners, which need performance improvement, and which should be replaced. This ensures a competitive and resilient supply base.

7. Support suppliers in improving efficiency

Procurement may need to assist suppliers in cost-reduction initiatives by observing their operations, identifying inefficiencies, and providing improvement recommendations. External perspectives often reveal blind spots that suppliers themselves may overlook.

8. Integrate information technology into procurement processes

Systems such as MRP, MRP II, and ERP improve the accuracy and speed of data processing. These tools help manage materials, equipment, finished goods, and finances while supporting operational, managerial, and strategic procurement decisions.

9. Conduct continuous procurement performance research

As business environments evolve, procurement processes may become outdated. Ongoing studies and performance evaluations help identify inefficiencies and guide the development of improved procurement models.

10. Implement social and environmental responsibility policies

Procurement must consider suppliers’ social and environmental practices (CSR). Selecting suppliers with strong CSR performance—supported by certifications such as ISO standards—helps promote sustainable operations and enhances the organization’s brand image.