4 Pillars of Procurement Excellence
In a bid to improve a company’s competitiveness and profitability, numerous companies are chasing after procurement excellence. But it all boils down to one simple question, how do you define procurement excellence? Different organizations and professionals have differing views on what comprises procurement excellence, but we all can agree that procurement excellence stems from an […]READ MORE >>
In a bid to improve a company’s competitiveness and profitability, numerous companies are chasing after procurement excellence. But it all boils down to one simple question, how do you define procurement excellence? Different organizations and professionals have differing views on what comprises procurement excellence, but we all can agree that procurement excellence stems from an organization’s ability to demonstrate excellence and maturity in the following areas:
The importance of spend data collection and power of analytics can be exhibited by a quote from a data analytics consultant, “Without big data analytics, companies are blind and deaf, wandering out onto the web like deer on a freeway.” The professionals can only optimize spends if they are keeping track of it and analyzing it. A proper spend analysis can provide a streamlined view into spend management lifecycle, spend data classification, spend category management, spend visibility and analysis, and purchasing-team knowledge management. Such information equips supply professionals with in-depth intelligence to make informed procurement related decisions.
Strategic sourcing can have a significant influence in determining the TCO along with quality and performance of supply chain. Strategic sourcing continuously re-evaluates and improves the purchasing activities of a company by examining supplier relationships, leveraging organizational spend, and sharing best practices across the organization.
Procurement professionals need to handle contract management with utmost care to ensure optimal service delivery, supplier relationship management, profitability, and compliance. An efficient contract management solution accelerates performance throughout the contract lifecycle by monitoring adherence, SLA’s and KPI’s, contract negotiation, and analyzing benefits that accrue from the contract.
Supplier Relationship Management
The companies that are successful and innovative are the ones who view suppliers as partners and co-create value to improve the supply chain and product performance constantly. Companies that continually measures, analyzes, and manages supplier performance can enhance their competitiveness, operating efficiency, and cost structures. For instance, Toyota with a deep belief in supplier development and collaboration, have leveraged some of their internal best practices in terms of manufacturing and lean to improve supplier’s production systems dramatically. As a result, it comes as no surprise that Toyota is one of the leading automobile company in the world with best-in-class procurement practices.
For more information on tail spend and how your organization can achieve increased cost savings:
- Why is Spend Visibility Important?
- Increasing Tail Spend Savings Using Technology
- Tail Spend Management and Why Your Business Needs It