What is a procurement process cycle?
Over the years, procurement process cycle has received a lot of attention as organizations across the globe have changed their focus from tactical functions to strategic business units. As a driver of major purchasing decisions, the function continuously and consistently works to demonstrate its success by correlating its impact to not only the success of its various stakeholder departments but to the success of the enterprise. With a direct reach to the bottom-line, the question posed to us is no longer whether procurement has the potential to add value, but whether it can deliver value. While the concept of procurement process continues to expand its influence, it is often met with significant challenges related to its technology, processes, metrics, and talent management. These challenges must be effectively addressed for the function to maintain its momentum and not suffer a misstep that could cost valuable stakeholder buy-in. But to be truly best-in-class, companies striving to advance procurement operations must avoid the common pitfalls of a one-size-fits-all approach and must instead align their procurement’s structure to enterprise-specific goals and seek customized solutions that will enable ongoing success. Moreover, companies today are placing more emphasis on a blended workforce, recognizing the value of full-time procurement resources, skilled contractors, procurement service providers, and group purchasing organizations.
Want to discover how you can lower the cost of your procurement process cycle by implementing procurement best practices? Request a free proposal and we will get back to you with our customized solutions
Here are the five tips for an impactful procurement process:
Take a Balanced Approach to Technology: Investing heavily in technology without training practitioners on how to use it may create a situation in which the platform or program becomes too burdensome to support. Analytics is virtually useless if the end user cannot interpret the data or attempts to circumvent the procurement process altogether. Reports are meaningless when no-one knows their purpose, and too often create busy-work that requires substantial time investment simply by stakeholders not communicating their needs appropriately.
Measure More than Cost Savings: World-class procurement organizations continue operating in a lean environment to deliver cost savings since that has remained the prime measurement of their success to-date. The paradox of “doing more with less – for less” is that it is not sustainable; eventually, cost-cutting efforts will decline, or quality metrics will suffer to continue reducing costs. As a result, the procurement process must identify strategic priorities not only within the function, but within the enterprise, and develop KPIs that have the greatest influence on those strategic priorities.
Reframe Procurement’s Involvement: A significant and often underestimated pitfall within procurement is the extent of their involvement in the strategic sourcing and procurement process. The function needs to be reframed and remain active throughout the implementation phase to deliver savings that impact the bottom-line.
Leverage Procurement as a Business Partner: Since stakeholders are directly affected by the impact of any procurement decision, they have high expectations from the procurement process, and want them to quickly get up to speed in understanding the specific needs of their function. Consequently, it becomes critical that procurement sets realistic expectations for each business stakeholders’ involvement in the sourcing process, outlining roles and responsibilities to enable accountability and form healthy business partnerships.
Seek Alternative Solutions: Top procurement teams must look to leverage innovative tools, collaborate with stakeholders and suppliers, identify strategic initiatives within the enterprise, and develop appropriate KPIs that capture the function’s influence on business priorities – outside of typical cost savings. By involving themselves early on in a sourcing and procurement process, proactively engaging stakeholders and customizing solutions per the department’s needs, the function is successfully able to deliver value and increase their scope of support.
Procurement best practices study for a leading consumer financial services client
Challenge: The client, was facing challenges in ensuring the agile discovery of innovative potential partners along with advanced risk management capabilities.
Benefits offered: Helped the client implement best-in-class sourcing and procurement process strategies across the supply chain.
Developing a competitive procurement process is crucial for companies to develop effective strategies. Stay ahead by requesting service on our procurement platform to gain the latest insights into procurement risks.
SpendEdge shares your passion for driving sourcing and procurement excellence. We act as a global strategic partner for leading Fortune 500 firms and other leading companies across industries. Our strength lies in delivering robust, real-time procurement market intelligence solutions that help sourcing and procurement professionals make informed decisions. Our innovative procurement solutions also help enterprises transform structural capabilities, improve execution efficiency, and fast-track time to savings. Every business needs smart procurement intelligence to stay at the top of their game; we provide actionable insights utilizing lean methodology to help enterprises make better purchasing decisions. We offer businesses with the precise combination of resources, tools, and techniques to help them redefine sourcing and procurement process for better cost savings. We cover a broad spectrum of industries starting from pharmaceutical and life sciences to transportation with expertise in supply market intelligence, spend analysis and benchmarking supply chain risk assessment, and category management.