Strategic Procurement

A Dynamic Field

Strategischer Einkauf‘s increasing importance is being driven by two economic changes:
– Increasing competitive pressures are forcing companies to check out procurement as a way of helping boost the bottom line. CEOs are looking for areas to chop costs, and streamlining procurement processes is a viable solution.
– A large amount of information mill doing more outsourcing. This will make procurement decisions increasingly important to business vitality.

There are numerous ways a highly effective procurement strategy improves performance, including:
– Eliminating maverick spending.
– Streamlining operations.
– Improving supplier relationships.
– Increasing bargaining power with suppliers.
– Strengthening supplier relationships.
– Aligning purchasing decisions with corporate objectives and goals.

How Mature Are You?

Measuring an organization’s Strategic Procurement maturity involves assessing how close it’s to achieving each one of the aforementioned results. There are four amounts of maturity: novice, intermediate, advanced, and expert. There is no relationship between company size and procurement maturity. Companies of any size are at various procedures in the introduction of their procurement functions.

Maturity Assessment Guide

1.Evaluate maverick spending within the IT department. Speak with supervisors and discover if unauthorized purchases are being made. If so, what kind of purchases? You may be shocked by the quantity of purchases occurring outside of formal procurement protocols. On the other hand, without any protocol in position, expect excessive levels of maverick spending. Strategischer Einkauf maturity is usually seen as a the next amounts of maverick spending:
oLevel 1: Significant maverick spending.
oLevel 2: Minimal maverick spending.
oLevel 3: Virtually no maverick spending.
oLevel 4: No maverick spending.

2.Examine your Procurement Transformation processes and procedures. Find your written group of procedures detailing the procurement processes for your organization. When there is no documentation, does your organization follow repeatable procedures? Or does each purchase lead to an ad-hoc patchwork of steps? Procurement maturity is typically seen as a the next amounts of procurement procedures:
oLevel 1: No processes or procedures.
oLevel 2: Processes and procedures exist, but are not documented.
oLevel 3: Processes and operations are documented and implemented.
oLevel 4: Major procurement decisions are based on a multi-function team.

3.Evaluate your relationship with suppliers. Look beyond your internal procurement processes and focus on how well you know your suppliers. Typically, the more information you’ve concerning the people you need to do business with, the greater the relationship. Without any purchase info on hand, you cannot create a partnership with suppliers and repair providers. With proper information, you can evaluate and rank suppliers.
Your procurement maturity level pertains to your supplier relationships the following:
oLevel 1: No purchase info on record; need to ask suppliers for it.
oLevel 2: Use supplier information to judge price, quality, and delivery.
oLevel 3: Rank suppliers and develop strong relationships with select suppliers.
oLevel 4: A supplier’s percentage of business correlates with performance ranking.

4.Assess your bargaining power. Information offers you with purchasing leverage. To what degree do you leverage information about suppliers to increase spending power? Do you coordinate purchases to improve leverage? Does your company possess strong negotiating skills? Your procurement maturity level is seen as a your ability to leverage spending power:
oLevel 1: Company spending power isn’t leveraged.
oLevel 2: Major purchases are negotiated and coordinated to increase leverage.
oLevel 3: All purchases are coordinated and leveraged.
oLevel 4: Supplier’s cost-reduction ideas are brought to your company first.

5.Determine Procurement‘s strategic alignment. Experienced buyers comprehend the overall corporate strategy and the procurement strategy. How many of your buying decisions are viewed as strategic decisions? Do you have a strategic plan in position? Procurement’s strategic alignment pertains to maturity the following:
oLevel 1: No strategic plan governing procurement.
oLevel 2: Although no strategic plan exists, purchases are strategically relevant.
oLevel 3: Virtually all purchases are aligned with corporate strategy.
oLevel 4: Perfect alignment with company goals and objectives.

6.Evaluate your buying experience. Do your buyers receive training? Do they comprehend the strategic relevance of buying decisions? Will they understand how to apply cost accounting to a negotiation? For instance, will they be aware of distinction between indirect and direct costs, as well as overhead? Your Strategischer Einkauf maturity level regarding buying experience is characterized as follows:
oLevel 1: Limited buying experience; no training.
oLevel 2: Buyer training program is within place.
oLevel 3 & 4: Buyers understand strategic buying and the importance of cost.

In conclusion

A strategic method of IT procurement can help spend less and improve efficiencies. The first step to going for a strategic approach to IT procurement technique is assessing your current procurement maturity.

Strategic Procurement Part Two

Many enterprises have gained a strategic advantage by treating their procurement like a strategic function. Pre-plan your procurement process and ensure it encompasses these guidelines.

Strong procurement processes align purchasing decisions with corporate strategy, increase bargaining power with suppliers, while increasing the worth obtained from investments.