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Excellence in Procurement: beyond Savings and Power Play!

Introduction


Procurement is historically regarded as a cost-centric department, while it has the potential to underpin value creation.

The next competitive battle is no longer about maximizing cost savings, or imposing on the organization to work with a few referenced vendors only.


Find out here about excellence in Procurement




Understanding the Complexity of Procurement

Procurement is not a one-size-fits-all.

While price considerations dominate for certain categories, such as basic office supplies, the landscape is far more nuanced for many other procurement domains.


Five Pillars of Procurement Excellence

  1. Agreement on Savings Accountability: Excellence in procurement begins with clear agreement between the procurement team, business counterparts, and finance on how savings will be accounted for. This collaboration not only bridges the silos but also ensures everyone is aligned the (positive) impact of procurement.

  2. Effective Organizational Design: Procurement excellence requires a well-designed organization that is equipped to handle both transactional procurement and strategic, value-driven purchases. It is about aligning teams and resources to their respective strengths and needs, finding the balance between tactical and strategic procurement.

  3. Partnership with the Business: Procurement should not operate in isolation but as a business partner. Excellence means actively engaging with internal stakeholders, understanding their needs, and tailoring procurement solutions that best serve their goals.

  4. Knowledge Transfer: Negotiating a favorable contract is only half the battle. Enforcing it is key! Excellence in procurement involves a seamless transfer of knowledge from procurement teams to the business. This ensures that the organization can maximize the benefits of the contract, whether it's leveraging cost efficiencies, quality standards, or innovative solutions.

  5. Standards and Flexibility: Procurement excellence strikes a delicate balance between setting standards and allowing for flexibility. While standardized processes and reference points are essential for efficiency, procurement leaders must recognize that not all spend categories can conform to rigid standards. The ability to adapt and cater to unique needs will drive value on the organization you serve.


Assessing your Procurement Excellence

Benchmark your organization against these 5 criteria, and assess how excellent your Procurement organization is!



Conclusion

Procurement has evolved into a multifaceted discipline. Excellence in procurement is about achieving a synergy between savings, collaboration, and value delivery. It requires procurement leaders to transcend the boundaries of their own department and align with business objectives.

When so, Procurement becomes a value creator, driving sustainable growth and success for the organization as a whole.

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