Leading Procurement Strategy
For organizations at different stages of growth, procurement plays different roles. These roles are by themselves a reflection of the level of development the organization is at, and the priorities that must be delivered. These levels as proposed by various scholars are not an indictment of the way procurement is treated within these organizations but show the cycle of growth that both the organization and Procurement must journey through, to achieve leading roles.
Transactional Procurement – where procurement has not evolved into playing a more strategic role within the organization, the team is mainly focused on meeting the organization’s basic needs for materials and services. Orders are processed, and supplies are expedited. Suppliers are followed up on for deliveries, and the team’s objectives are mainly around price reduction for the items they procure. Skills do not need to be specialized here, as anyone with a basic understanding of numbers and IT can function here.
Cost-driven Procurement – the cost-driven procurement team has evolved with some focus on strategy but has cost minimization as its major objective. Business processes are more streamlined, and better deals are gotten from suppliers. Spend analysis and Total Cost Ownership (TCO) tools may be in use, and the team may possess strong negotiation, contracting, and analytical skills. They might have the skills to do proper Return on Investment (ROI) evaluations for initiatives.
Integrated Procurement – this team has a clear strategy that is aligned to the rest of the organization. They have identified their stakeholders, internal and external customers, and suppliers, across the supply chain, and aligned their processes. The team manages these relationships across different levels and are creating value for the company. Influencing, emotional, and relational skills are more in play here, because procurement will need to influence decisions within and without the organization.
Leading Procurement – here, the procurement team is involved in shaping the organizational strategy and transforming and leading the supply base to deliver sustainable competitive advantage. Visioning and Transformational skills are requirements for operating at this level to create strong supply chains.
Regardless of the role Procurement currently plays in your organization, HaroldandCo can work with your team to optimize the benefits of the current level and transform them to a Leading procurement team.
Procurement Specific Skillsets
CONTRACTS MANAGEMENT – work with the legal team to draft and execute written commercial agreements for ongoing requirements; Confidential Disclosure Agreements, Memorandum of Understanding, Letters of Intent, Short, and Long form contract agreements, etc. Should have a commercial understanding of contract law.
COMMERCIAL BIDDING - Effectively utilizes competitive bidding tools, enquiry, formal bidding documents, vendor evaluation criteria, bid summary and analysis, bid recommendation, successful award and non-award letters, and reverse auctions to deliver business results/competitive advantage.
COMPETITIVE ANALYSIS - Contributes to competitive advantage through knowledge of competitors’ materials, technologies, supply base, sourcing strategies, suppliers, cost structure, and processes to benchmark own initiatives and drive value.
NEGOTIATIONS - Plans and carries out negotiations, including development of negotiation objectives/goals/strategies/tactics, to achieve required business results with desired impact on supplier relationships.
SUPPLIER RELATIONSHIP MANAGEMENT - Manages the total relationship with external vendors to effectively represent your organization to the supplier and appropriately represent the supplier to you. Able to influence supplier resource allocation, product offerings and business decisions that support your company’s needs and deliver best value across the supply chain.
SUPPLIER ANALYSIS - Through superior understanding of supplier capabilities, can use that understanding to deliver the best of that supplier’s goods, services, technologies, etc. to provide optimum total value results to your company.
STAKEHOLDER MANAGEMENT – work across the Supply Chain and the rest of the organisation, applying appropriate relationship skills per stakeholder category to gain alignment, and deliver a balance between expectation and results.
PROCUREMENT SOURCING STRATEGY – deliver category sourcing strategies with an outlook of 3-5 years that provide guidance for adequate planning and implementation that support the achievement of the overall business objectives
INDUSTRY ANALYSIS – Delivers a competitive advantage for your company by obtaining and analyzing information on industry supply/demand dynamics, production technologies and cost structure which is used to build effective sourcing strategies, cost forecasts, and negotiation positions. Determines through the Porters’ 5 forces the appropriate approach to the market.
POLICY APPLICATION – develops and applies up to date procurement policies that are audit-proof and support the delivery of the medium to long term company and team goals.
At HaroldandCo, we systematically progress your Procurement team through 3 stages of these skillsets.
Fundamental – where they will undergo online or physical training and demonstrate a basic understanding and application of the skills, and work through one or two live transactions.
Advanced – a team member at this level would have demonstrated through knowledge tests and on a day to day basis, that he/she consistently applies these skills as a way of working
Expert – an expert is easily recognized as a leader within the team. He/she has applied the skill in various scenarios, and has gained additional knowledge beyond his immediate sphere, through the study and application of best practice methodologies.
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