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Maturity Models Can Help Improve Procurement Performance

Feb 28, 2017

Maturity models allow organizations to assess their maturity in a number of different areas and identify where they need to improve in order to achieve increased development and success. Maturity models and maturity assessment can improve an organization’s procurement performance by identifying areas of improvement and future initiatives, and as well as what they should be prioritizing in terms of solutions, suppliers, software, and other factors.

Maturity models are usually developed by analytics or consulting firms. Maturity models use external benchmarks, recent data and statistics compiled from reputable organizations, and industry management best practices to assess a particular organization’s maturity. These models compare organizations to others within the same industry in order to measure their success as well as their ability to evolve and to compete with others like them in the market. Most maturity models and assessments will have a specific number of dimensions or categories on which to rate an organization. For procurement, the assessment should also look at how the organization utilizes procurement support solutions and procurement intelligence services. Most effective procurement maturity models will include categories such as supplier relationship management, reporting and documentation, sourcing, strategy, and system support. A general maturity model or assessment will address all aspects of the organization’s business, with emphasis put on factors such as sales, mergers and acquisitions, and integration of analytics, as well as the organization’s product or service portfolio, programs, project management, and other levels of management.

Maturity assessment uses maturity models to assess an organization’s overall performance in the context of a particular industry and capacity for future success. Though maturity assessment can be done internally as a self-assessment, it is best performed by a consultant or analyst who does not regularly work within the organization that they are assessing. This eliminates bias and ensures an honest and comprehensive assessment. The consultant should be well-versed in the ins and outs of the industry and should be familiar with the competitors and peers of the organization that they are assessing. For procurement assessment, they should also be familiar with supply chain operations and risks, as well as the latest procurement solutions and technologies.

Once maturity models have been utilized, and a proper maturity assessment has been performed, the organization should be left with a number of actionable insights, suggestions for improvement, and an idea of how they stack up against their industry peers. In terms of procurement, they will be able to identify where their procurement performance is lacking and what they can do to address that. This will ideally include connectivity and technology upgrades, suggestions for more price-competitive suppliers, and improvements to their sourcing and procurement strategy. Comparing an organization’s procurement process to the procurement strategies and practices that are most common in the industry will also assist them in competing with their peers, allowing them to adjust their strategy, suppliers, and cost in accordance with industry best practices.

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