If you find that your purchasing demands are growing faster than your procurement capabilities can handle, and taking the process to breaking point, then it may be time to look into procurement transformation. No two organizations are identical. Companies operate in different markets, selling their products and services to many different customers, and procuring from many different suppliers. It is therefore important for an organization to find the right solution for their unique business challenges by aligning their needs with the following core strategies: Procurement kpis
- Procurement Diagnostic
- Strategic Sourcing
- Procurement Excellence
This entails outlining goals for spend analysis; business case; maturity assessment; target operating model; opportunity assessment; and transformation roadmap. Procurement diagnostic may be used by businesses to scope the opportunity for transformational change in procurement. This includes the identification of savings opportunities and improvement initiatives, assessment of the level of procurement maturity and identification of the gaps between the existing procurement capabilities and the desired level of performance.
Procurement transformation entails the proper outlining of goals for spend and opportunity analysis, in and outsourcing, supplier evaluation and selection, innovation, sustainability and contract implementation. A strategic sourcing delivery framework can guide an organization towards the reduction of third party spend, and securing supply in key spend categories. Such a delivery approach will typically cover a wide range of activities from contract implementation to spend analysis. In addition, such a sourcing approach would address in and outsourcing questions, as well as new developments such as innovation and sustainability in the procurement of goods and services.
A good procurement transformation framework should address the changes needed to build the necessary organizational, process and technological capabilities so as to deliver lasting improvements. Such changes will typically relate to the target operating model; tax efficient procurement; contract and supplier relationship management; and process optimization and tool selection and implementation.
Transformation entails making change management a priority, listening to employees, partners, suppliers and stakeholders, as well as making mistakes and adapting quickly to them. Before transformation is carried out, procurement may be viewed as a reactive function, seen as non-strategic and lacking in the right internal talent. In short, procurement can very well be a barrier to the need for a business to move quickly in adapting to marketplace changes. However, with an effective procurement transformation strategy in place, an organization is able to transform itself into a high performing function in no time at all.