By Stefano Maifreni, Founder and COO of Eggcelerate
Procurement is often considered a standalone function that works in tandem with other departments but is rarely integrated deeply within the operations framework. However, bringing procurement under the operations umbrella offers numerous strategic advantages, particularly for companies that aim to foster efficiency, agility, and cost control.
The challenges faced in recent years—from pandemic-induced supply disruptions to logistics bottlenecks like the Suez Canal blockage—have illuminated the need for tighter, more coordinated efforts between procurement and operations. The key lesson is that agility and responsiveness aren’t just buzzwords but survival mechanisms. By aligning procurement more closely with operations, companies can create an ecosystem that better anticipates disruptions, controls costs, and ensures continuity.
One of the most significant benefits of incorporating procurement into operations is improving inventory management. The Just-in-Time (JIT) approach, once a gold standard, has shown its vulnerabilities in the face of recent disruptions. Businesses now realise that a hybrid model, which includes elements of Just-in-Case (JIC) inventory, is crucial for mitigating risks and ensuring customer satisfaction.
When procurement is a part of operations, it can directly access sales forecasts, production plans, and inventory data. This real-time insight allows procurement teams to make more informed decisions about when and how much to order. Instead of simply responding to requisitions, procurement becomes proactive, focusing on building reliable supplier relationships and anticipating needs before they become emergencies. This proactive approach helps maintain a balanced inventory—enough to cover potential spikes in demand without tying up excess capital in unsold goods.
Another critical reason procurement should be within operations is to strengthen supplier relationships through a more strategic lens. Procurement’s role isn’t just about finding the lowest price—it’s about building resilient partnerships in the face of change. When procurement and operations are integrated, they can collectively identify critical suppliers, negotiate better terms, and ensure timely payments.
Operations can also benefit from procurement’s insights into supplier reliability, which can be crucial for planning production schedules and ensuring business continuity.
Procurement and operations can establish a dual-sourcing strategy that mitigates risks by working together. For example, the operations team can plan production with the flexibility to switch suppliers if necessary. At the same time, procurement ensures that at least two qualified suppliers are available for every critical input. This reduces dependence on a single source and creates agility in responding to disruptions.
Integrating procurement into operations also improves forecasting accuracy. Sales, procurement, and production depend on accurate information to keep the business running smoothly. If procurement is siloed, it may miss crucial sales data and an upcoming demand spike that could lead to shortages or production delays. However, procurement has direct access to sales insights as part of operations, allowing it to make decisions based on real-time data rather than outdated or incomplete information.
Production planning becomes smoother when procurement is fully embedded in the remit of the operations. With aligned schedules and forecasts, procurement teams can ensure that raw materials and components arrive just when needed—avoiding delays that lead to lost sales and the stockpiling that ties up working capital. This synergy can mean meeting customer demands promptly or losing out to a competitor.
Lastly, procurement as part of operations allows businesses to leverage existing assets more effectively. Procurement can help prevent production underutilisation by ensuring raw materials are procured on time to align with production schedules, thus avoiding idle time. Procurement can work closely with operations to anticipate and meet production needs efficiently. This coordinated approach also minimises the risk of holding inventory for too long, reducing costs related to warehousing and obsolescence.
The combined knowledge of procurement and operations makes it easier to plan production runs that maximise equipment use, lower costs, and avoid unnecessary overtime. It’s not just about keeping shelves stocked—it’s about optimising every link in the supply chain.
In today’s unpredictable environment, procurement should be seen not just as a cost centre but as a strategic partner within operations. By making procurement part of the operations remit, businesses can build a more resilient supply chain, improve production efficiency, and reduce inventory and supply disruption costs. Integrating procurement into operations isn’t just a structural change—it’s a strategic shift that empowers businesses to adapt, grow, and thrive in the face of uncertainty.
Stefano Maifreni is an accomplished COO known for driving growth in Technology Manufacturing, Drones, IoT, AI, GreenTech, and Fin/InsureTech.
He excels in strategic execution and transformative leadership, fostering sustainable efficiency across multiple business domains. A strong advocate for organisational efficiency and diversity, he’s adept in people and change management, with a particular focus on AI and automation for operational excellence.
He founded Eggcelerate to revitalise B2B businesses, ranging from Technology Manufacturing to AI and GreenTech, showcasing his ability to drive focused and sustainable growth.
An Executive MBA alumnus of the London Business School, Stefano also contributes to esteemed publications like Forbes, The Guardian, The Telegraph, and The Times’ Raconteur, sharing insights on strategy, operations, and people management that reflect his profound industry knowledge.
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