6 elements of a model procurement function

If there's commitment across an enterprise to develop procurement into more than a purchasing tool, it has the potential to create long term growth, innovation and sustainability

Here are 6 pieces of advice from the professionals on the elements that can combine to create this

1. Recruit the best people

Procurement can be seen as less glamorous It faces strong competition for the best peopleChanging the way it’s viewed is essentialCommunicate the scope and exciting elements of the role, such as:

o Collaboration with colleagues, suppliers and partners,o Opportunities to innovate and pursue sustainable practices

1. Recruit the best people

Qualifications and evidence of learning is always important, but….Soft skills are just as key to ultimate successPeople need to communicate with colleagues around the business and with suppliersThey often have to manage change Empathy, intuition and people skills are vital

2. Ensure cross team understanding• Procurement needs to

link its work with the needs and aspirations of the rest of the business

• Colleagues across the organisation need to know what it does and see its success stories.

• Shadow other teams to understand how they operate and where the pressures lie

• Share information, compromise and work together to plan for eventualities

• Procurement functions are sometimes put in place relatively quickly with the aim of making savings as quickly as possible

• However, insight and technology company CEB Global suggests that without a full review at the very outset, important things can be missed, such as o Spend profileo The discipline of that spend o Leadership understanding of procurement capabilities

3. Review fully before set up

3. Review fully before set up

• A proper review at the start will make organisations more successful in tailoring the function far more accurately to their needs

• Create a short and long term strategy

• Identify KPIs for procurement before it spins into action

• It could make all the difference

4. Ensure there’s a detailed spend map• A detailed spend map can

be the driver for sustainable savings across a business

• According to Ernst & Young, procurement needs to engage with the wider organisation to understand how and where costs could be reduced across the value chain

• Or there is a risk of undiscovered savings, commercial decisions made in isolation & archaic processes undermining progress

4. Ensure there’s a detailed spend map• A spend map can also

be developed through contract management and supplier relationship management

• Measuring supplier value is not just tracking performance but identifying ways for all parties to improve throughout the life of the contract

5. Get a balance between the long and short term• Achieving savings over the

longer term, as well as immediate future, shouldn't be the sole responsibility of procurement

• But it should work with other business units to drive awareness of longer range goals

• And ensure that initiatives to achieve this are implemented as planned

5. Get a balance between the long and short term

• Work on an understanding of total cost of ownership

• Ensure that colleagues see the bigger picture

• Develop practices to enable better long term savings

6. Work with facts

• Take a fresh approach to processes and deal with facts, rather than beliefs, emotions or politics

• In category management, cross functional teams should work collaboratively

6. Work with facts• Objectively review how

categories can be managed moving forwards

• Take an open approach to maximising or pooling resources

• The right level of management should be assigned to each category

• Responsibilities for making decisions should be assigned at appropriate levels and described fully to each stakeholder

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