Procurement for Porter’s 5 Forces
In today’s world, with rising ambitions and ease of technology, everyday, new business ideas are born. Tomorrow, one of these could give your company sleepless nights. The definition for ‘Barriers to Entry’ in the Porter’s model changed the way world looked at competition. Businesses started bracing themselves for not just what was but also what could be. So let us visit those classroom theories again and see if we are able to work from that perspective in the way procurement prepares businesses for today, and tomorrow.
Threat of new entrants
Influence the way your company engineers its offerings
Right at the head of the supply chain is where this gets controlled. Hence procurement plays a crucial role in buying parts or sub-parts such that ‘economies of scale’ can be utilized to the most optimal level in a company’s manufacturing processes. Standardization of certain parts sourced, or redesigning of the order in which the components or use-values are added to the goods-in-making are some of the ways procurement contributes directly.
Influence what gets engineered and designed
Search for something special, from somewhere special. Then put it inside your company’s product and transform it into consumer loyalty. Sounds exciting, doesn’t it? This would, however require collaboration with market research, product managers and research and development team. If you can manage to influence it this deeply, and the idea finds a way to stick with your consumers, then that could be one of the most inspiring stories of your career!
Influence readiness for government regulations
Take an unwelcome regulation and flip it into an entry barrier for new players. Expect the unexpected. Look through newspapers, find what the governments in your country or event the other regions are moving towards. Being a part of the commercial policies discourse will help you keep your company on its feet when a blanket rule or some such mandate gets enforced on your industry players. Your supplier relationships and future-forward vision will see you through as much as possible.
To revisit Porters’ original work in detail and study its application for procurement, click the download button below to access the whitepaper- “Revisit Porter’s Five Forces to Unleash Procurement Innovation”
