Supply Chain Council of European Union |

Is Procurement working because of the process, or in spite of it?

When starting a transformation in a company’s Procurement organization,
one common thread we often see is people who insist that the organization is
fine and working as they expect. Items are being bought and often savings have
been negotiated. Once we dig down a bit though, we find that there is often a
large number of problems beneath the surface.

Some of the easiest ways to know if your Procurement
organization is working properly is by looking at these metrics:

  • How much of Procurement’s time is spent putting
    out fires (last minute requisitions, vendor issues, chasing down approvals,
  • At what stage do business groups engage
    Procurement into their sourcing process?
  • Are end users often complaining about cumbersome
    and difficult-to-follow policies?
  • Does Procurement purchase everything “onesy-twosy”
    as it comes up, or is it done on a more holistic view?

The answers to these should be fairly obvious: If you are
not happy with the answers to one or more questions, your Procurement
organization is likely not operating as well as it could be, and is not
generating the true value to the business that should be expected.
As long as Procurement spends most of their time dealing
with never-ending day to day issues, there is no time to invest in more
strategic initiatives. We often find that needing to use a large portion of a
Procurement team’s resources towards consistent fire drills are indicative of a
broken process rather than part of a typical Procurement organization.
Many of these can be solved through a Procurement
transformation. Look at where the process is broken. See how your existing technology
could be better leveraged, or if what you have is not optimal. Ensure your
people are in the right roles to match their skillsets and the company’s needs.
Define your end goals and determine which metrics will show
a proper turnaround, and ensure you are not sliding back into old practices.
And most importantly, work to elevate the role of Procurement so that
departments across the company see the organization as a strategic asset rather
than another required step to making a purchase.

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