3 Reasons to Develop a Comprehensive Procurement Strategy
By Mackenzie Oakley | July 19, 2022
We all know different purchasing scenarios will require us to follow certain processes or have criteria that needs to be met. Because of this, it isn’t necessarily wise to approach procurement with a one-size-fits-all mentality.
Developing a comprehensive procurement strategy ensures there is a vision for the sourcing function in place, helps guide procurement professionals through the decision making process, and clearly defines goals.
Benefits of building a comprehensive procurement strategy
A multi-faceted approach to sourcing will also do three crucial things for your organization:
- Minimize costs and reduce errors
- Maximize quality and experiences
- Help align procurement with the company’s overall objectives
Minimize costs and reduce sourcing errors
While it’s not the only thing procurement should be focusing on, one of the main purposes of the procurement function is to identify cost savings opportunities. When category managers, for example, feel empowered to utilize the different aspects of a procurement strategy at any given time, they are better equipped to manage their spend accordingly.
Depending on the type of purchase, going through the RFx process may be necessary. For other types of spend, it’s possible the category manager has the ability to negotiate with suppliers, or work with a third party to access better pricing and a wider range of contracts.
Having different tools available as part of your overall approach to sourcing will help procurement realize the savings they’re after, and reduce the chance that mistakes are made.
Maximize quality and experiences
A cohesive procurement strategy includes procurement’s ability to nurture supplier relationships in various ways that can lead to higher quality standards, increased reliability and innovation.
Building meaningful buyer-supplier relationships increases the likelihood that your organization will become the supplier’s customer of choice, reduces risk, and drives value beyond cost savings.
Aligns procurement with the company's overall objectives.
When the entire organization puts up a united front, all working towards the same goals, big things can happen. If procurement is able to utilize various tools and resources built into a well-rounded purchasing strategy, its able to remain on track and stay aligned with the company as a whole.
Elements of a comprehensive procurement strategy
There can be a lot of moving parts to procurement and luckily, practitioners have several options and various ways they can go about procuring the goods and services they need for their organizations.
While not an exhaustive list, here are a few elements that could be part of an all-encompassing procurement strategy, available to procurement to use when and if they see fit:
Having technology in place can make all the difference when it come to procurement achieving success. The tech space is filled with procurement tools that help to streamline the purchasing process, manage contracts, and increase efficiency. Whether you need to use a certain platform to submit an RFP or want to better manage your supplier relationships, integrating the right technology solutions into your procurement strategy is a smart move.
The RFP process is notoriously time consuming and lengthy, but they are often necessary when it comes to purchasing certain items. Because of this, the RFx process should absolutely be part of your procurement strategy. The key, however, is knowing when you need to use it, and when it may be possible to bypass the process all together.
Businesses may enroll the help of procurement consultants to drive down costs and provide a “health-check” of the procurement function as a whole. Bringing in a consultant may be a viable option for some organizations that are looking to overhaul their procurement strategies or refine their policies.
Supplier Relationship Management
If executed in the right way, supplier relationship management (SRM) programs can lead to cost reduction, improved efficiency, stable prices and business continuity. Carving out a time and place for SRM activities will undoubtedly enhance your sourcing strategy and lead to improved experiences for both your suppliers and your procurement team.
Dividing up certain aspects of the procurement process and outsourcing to a third party is another way to save money, time and effort.
Partnering with a group purchasing organization can help you better manage your indirect spend or tail spend categories, expands your network of suppliers and increases the number of resources available to you, and unlocks additional savings opportunities you otherwise may have missed.
A complete strategy that works together
There are of course other aspects of sourcing that procurement professionals could employ but the main objective when developing a cohesive procurement strategy should be to have options available to your team. This makes it so they’re able – and empowered – to make the best purchasing decisions for the organization.
Your approach to procurement shouldn’t be all-or-nothing. Different categories of spend rely on different techniques to be managed effectively so it’s important to have a complete toolbox at your disposal. Procurement is a unique function that should be agile and able to adapt to ever-changing environments in a way that still drives cost savings and value for the business.
Ready to take your procurement strategy to the next level? Una can help. Our team of Sourcing Advisors is ready to help you formulate a plan for procurement success. Contact us to learn more.
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Do you have questions about group purchasing? Wondering how a group purchasing organization works to save you money, time, and effort?
Una’s team of Sourcing Advisors is here to help. Contact us to learn more.