How to Jumpstart Procurement

A playbook to jumpstart procurement and implement a sourcing function that facilitates increased efficiency and profitability.

procurement playbook

Table of Contents

Introduction

Many procurement professionals find themselves tasked with accomplishing what feels like the impossible: on day one of your new job, it’s on you to build an entire procurement function from the ground up.

Some organizations, both large and small, operate haphazardly when it comes to purchasing and spend management. Processes for procuring goods and services are nonexistent, spend is out of control, and there is no sense of trust amongst the suppliers being utilized, leaving supply chains at risk.

Companies are realizing just how necessary it is to establish a comprehensive procurement program in order to streamline the way they purchase. In addition to spend management, a well-rounded procurement strategy is also one that aligns with business objectives, identifies cost savings, builds long-term relationships with sup- pliers, and, ultimately, leads to profitability.

It’s a huge undertaking – and they’ve hired you to do it.

If you’re feeling a little over- whelmed and don’t know where to start, don’t worry. We’ve helped procurement professionals in your position before and are confident that, with the right tools and support, you’ll rise to the occasion.

In this playbook, we’ll go over everything you need to know in order to successfully implement a holistic sourcing strategy in your new position, step by step.

Challenges of Jumpstarting Procurement

Implementing a procurement program from start to finish is filled with challenges. The pressure is on to make an immediate impact, with cost-savings at the top of your priorities. You’ve got big plans for this role and a lot is riding on your first 100 days.

Creating and implementing new processes takes time, and might be met with resistance from internal stake- holders or other staff members that are used to doing things a certain way.

cost savings

What’s more is the fact that you were brought on to spearhead the entire operation which means you’re either acting alone, or with a very lean team at your disposal. There are several moving parts to address and having them all fall onto one person’s shoulders is a lot to ask.

Now, we have no doubt in your ability to accomplish such a feat, but you don’t have to do it all on your own. You’re already a step ahead in your request for a tool such as this, and Una is dedicated to walking through the process alongside you.

How to Jumpstart Procurement

The main purpose of procurement is to make sure businesses are purchasing the goods and services needed to operate in an efficient and profitable manner.

To be a valuable contributor to the organization, you need to first understand the business objectives and the current state of spend culture.

Identify Business Goals

From a financial aspect, your organization is probably always wanting to increase revenues, but what else are the business leaders trying to accomplish?

Once you have a clear picture of how the company envisions itself operating as a whole, you have a foundation on which to build upon.

Assess the Team

Is procurement a one person function? Are there just a handful of people on your team to help put your plan into action?

Your team’s capacity will determine the speed at which you operate and the outcomes you’re able to achieve.

Analyze Spend

Spend culture encompasses every aspect of how a company spends its money, from large purchases down to printer ink.

Collect as much information as you can from stakeholders and suppliers to get full visibility of spend, create the department’s KPIs for success, and then identify the “low-hanging fruit.”

Align Procurement

Aligning procurement’s activities with the wider business puts the team at the forefront of the decision-making process instead of reacting to it.

When taking the organization’s goals into consideration, procurement has the ability to put real, actionable practices into place that will make a direct impact on the company as a whole.

Assessing Your Sourcing Options

After going through these important steps of identifying your new organization’s goals, formulating a plan to align procurement with those goals, and analyzing the current spend culture, it’s time to research suppliers, negotiate contracts and pricing, and implement new spend policies.

You’re probably excited to find out the best way to move forward, but here’s the deal — there’s not a “one-size-fits-all” answer. We can, however, point you in the right direction so you can make informed decisions for your organization.

Many lean procurement teams like yours consider three sourcing options: in-house, consulting, and GPOs. And the smartest of them all will employ a combination of the three.

You were hired for a reason, right? If you’re planning on braving this project alone, it’ll be up to you to develop the strategies and most likely execute on them as well. It’s also your responsibility to deliver the most value and make an impact quickly.

First you’ll need to have clean data and spend software to identify where to begin. This tends to be the biggest roadblock in procurement, but sound strategy depends on it.

After emails and calls to current suppliers to inquire on lower pricing, you’ll research alternative suppliers and begin the benchmarking process for each category.

Category by category, you’ll find opportunities to save, consolidate or re-strategize. Old con- tracts might need edits and new agreements will need to be drawn up.

Essentially you’ll be a category manager, negotiator, and procurement director all-in-one. Sound impossible? It’s not, but your timeline may need to adjust to allow for each phase.

If you choose to handle everything in-house, this gives you an opportunity to oversee quality control, keep an eye on costs and focus on savings. An important question to ask yourself, however, is if you’re able to give as much attention that’s required to manage every single category in this way.

We referenced earlier just how big of a task starting a new procurement program really is. Reaching outside of your organization for guidance and additional support would be a logical move, especially if you’re working alone or with limited resources.

Another option would be to hire a consultant. Procurement consultants can be beneficial if you don’t currently have the necessary expertise needed to run all aspects of a procurement department.

There are a myriad of procurement specialties and skill sets, so you’ll want to hire someone who can be a generalist with a wide lens to diagnose inefficiencies and identify new opportunities. The goals of any good consultant should be to drive profitability and create strategic value through your procurement function.

Consultants can help with things like cleaning up data and sorting through spend analytics, issuing RFPs, implementing new technology, bundling contracts, or consolidating suppliers.

Before deciding on what type of procurement consultant to hire, spend some time considering what holds you and your team back. The more specific you are, the better idea you’ll have of what type of consultant you may need.

The lesser known option is to outsource some procurement activities to a group purchasing organization (GPO). GPOs leverage the collective buying power of their members to obtain volume discounts from suppliers. Once you join a GPO, you’re able to take advantage of pre-negotiated contracts and receive discounted pricing on the goods and services needed to run your business, saving you money, time, and effort.

Typically, GPOs are used when a company is lacking buying power, has fast-approaching timelines, limited procurement staff, or all of the above. When employed properly, a GPO can be an efficient sourcing tool that should deliver much more than cost savings. The best GPOs will play a supportive role in your comprehensive procurement plan, complementing your sourcing strategies, not replacing them.

Most importantly, there should not be a fee structure with the GPO you choose to work with. The beauty of the GPO model is that because of their members’ purchasing volume, compensation comes from the suppliers themselves, not the members.

Comprehensive Procurement

Keep in mind that while you have options, it shouldn’t be a “one- size-fits-all” kind of approach. We generally recommend that a combination of all three should be considered when developing your overall procurement strategy.

Your business goals, tech stack, team size, and access to spend data will help determine the best combination for your organization.

Managing certain highly strategic categories in-house makes sense if they’re a source of competitive advantage or you have access to in-house expertise regarding that category.

A procurement consultant may be beneficial when the time comes to implement new software or add to your team.

Adding a GPO to the mix could greatly improve your ability to manage your non-strategic spend or tail spend, which would free up your time to either work with a consultant in other areas or focus on the top 20% of categories, for example.

cost analysis

Time Value Illustration

To show a clear picture of just how much time and effort goes into getting a procurement program up and running, we’ve put together a basic time/value illustration based on an average salary of one procurement leader tasked with the job.

This shows the estimated time and cost* of implementing a new procurement program on your own, with the help of a consultant, and utilizing this playbook with a GPO.

Time Value illustration for jumpstarting procurement

Working With Una

We put this playbook together for two reasons — so that you could see your sourcing options laid out, and to offer our help executing your plan.

Una is a sourcing accelerator on a mission to increase your organization’s profitability quickly using our group purchasing platform. Our sourcing advisors and member experience team are passionate about helping procurement and business leaders save money, time and so much effort.

We think we’re pretty great, but you should decide for yourself if our process is a good fit. Here’s exactly what you can expect from start to finish:

After expressing your initial interest to learn more, the first step is to have a 30-minute discovery call with one
of our Senior Sourcing Advisors. Think of it more like a two-way interview where both parties can decide if there is potential for a good fit.

Our Sourcing Advisor will ask a series of questions, including what your goals are and what problems need to be solved. The call sets the timeline and potential opportunities to explore. Typically both will have a bit of homework to help the process move forward to the cost analysis, so be prepared to gather up your historical spend data.

Just as you performed your own spend analysis at the start of this process, our Sourcing Advisors work with you to conduct a cost analysis one category at a time. This is where Una really rises above compared to other solutions. We take over the time and effort that you’d normally put in sourcing in-house or through a consultant.

If you have a list of categories in mind, let them know, otherwise it’s common to start with something like office supplies, packaging, or MRO where we tend to be the most competitive.

This serves as a way to benchmark your current pricing and assess the value of your contract with a supplier. Una will send your spend information directly to our supplier base to compare cost and identify potential savings opportunities. If the contract Una has in place would yield additional savings, we can get you connected to those contracts within days or weeks.

Although rare, there is a chance that your current contract is a better value. In that case we would advise that you stay put until it’s time to reassess.

The process of finding a reliable supplier and negotiating contracts can take months, if not longer. It’s also difficult to do when you’re solely responsible for every other aspect of the procurement process. If you choose to partner with Una, you’re choosing us to become an extension of your procurement team.

Our job is to help you build and get the most value out of your supplier base. Una’s catalog of pre-negotiated contracts are already in place, meaning we’ve done the heavy lifting in terms of vetting suppliers and negotiating the best possible pricing for our members.

This means that opposed to the first two solutions, you won’t need to reach out to suppliers and handle all of the correspondence that comes along with that process. Based on the information gathered during your discovery call and cost analysis, our Sourcing Advisors will walk you through our catalog of suppliers and recommend those who will best meet your needs.

Our team will facilitate the relationship with each supplier by introducing you to the National Account Manager, if applicable, and assist with any questions you have about the contract.

The Una Difference

Una is a group purchasing organization and yes, we’re here to save you money. The truth is, any GPO could probably do the same.

But our job doesn’t end at savings – it’s about more than that.

With Una, you’re choosing a partner in procurement and our Sourcing Advisors are there to offer guidance and expertise to help you accomplish your goals. You remain in control and each conversation is based on your desired outcomes.

The best part? Una membership, and the benefits that come along with it, is free. There are never any purchasing requirements and you’re never locked into contracts.

The immediate cost savings generated from our pre-negotiated contracts is a given, but working with Una means you’ll see additional benefits that include visibility, consolidation of spend, and streamlining of purchasing.

We help you move faster, save more, and look better doing it.

Ready to jumpstart procurement at your organization? Download a full copy of this playbook or join now to get started.

jumpstart procurement