Strategic Procurement

An engaged Field

Strategischer Einkauf‘s increasing importance has been driven by two economic changes:
– Increasing competitive pressures are forcing companies to check out procurement as a means of helping raise the main point here. CEOs are searching for areas to chop costs, and streamlining procurement processes is a viable solution.
– A large amount of companies are doing more outsourcing. This will make procurement decisions increasingly vital that you business vitality.

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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 Supplier Diversity maturity involves assessing how close it is to achieving each one of the aforementioned results. You will find four levels of maturity: novice, intermediate, advanced, and expert. There is no relationship between company size and procurement maturity. Companies of all sizes are in various stages 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 that’s the case, what kind of purchases? You might be shocked by the quantity of purchases occurring outside of formal procurement protocols. On the other hand, with no protocol in place, expect excessive amounts of maverick spending. Supplier Management maturity is typically characterized by the next amounts of maverick spending:
oLevel 1: Significant maverick spending.
oLevel 2: Minimal maverick spending.
oLevel 3: Without any maverick spending.
oLevel 4: No maverick spending.

2.Examine your Future Procurement processes and procedures. Find your written group of procedures detailing the procurement processes for your organization. If 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 usually seen as a the following amounts of procurement procedures:
oLevel 1: No processes or procedures.
oLevel 2: Processes and operations 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 outside your internal procurement processes and concentrate on how well you know your suppliers. Typically, the more information you have about the people you need to do business with, the greater the connection. Without any purchase info on hand, you cannot create a partnership with suppliers and repair providers. With proper information, you are able to evaluate and rank suppliers.
Your procurement maturity level pertains to your supplier relationships as follows:
oLevel 1: No purchase information on record; have to ask suppliers for it.
oLevel 2: Use supplier information to evaluate 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 also provides you with purchasing leverage. As to the degree do you leverage information about suppliers to improve spending power? Would you coordinate purchases to increase leverage? Does your company possess strong negotiating skills? Your procurement maturity level is characterized by what you can do 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 delivered to your company first.

5.Determine Supplier Management‘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 as follows:
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 objectives and goals.

6.Evaluate your buying experience. Do your buyers receive training? Do they comprehend the strategic relevance of buying decisions? Do they know how to apply cost accounting to some negotiation? For example, do they know the distinction between indirect and direct costs, in addition to overhead? Your Strategischer Einkauf maturity level with respect to buying experience is characterized the following:
oLevel 1: Limited buying experience; no training.
oLevel 2: Buyer training program is in place.
oLevel 3 & 4: Buyers understand strategic buying and also the need for cost.

In conclusion

A strategic method of IT procurement might help cut costs and improve efficiencies. The first step to going for a strategic method of IT procurement technique is assessing your current procurement maturity.

Strategic Procurement Part Two

Many enterprises have gained a strategic advantage by treating their procurement as a strategic function. Map out your procurement process and ensure it encompasses these best practices.

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