5 Levers for Effective Procurement Transformation
In the past, many global businesses have managed to achieve impressive efficiencies and savings through procurement outsourcing.
However, this is no longer enough.
As companies seek to attain the next level in performance, they must challenge themselves, as well as their service providers to fundamentally transform their procurement functions.
Below is a look at various essential levers for achieving procurement transformation.
Every aspect of procurement and sourcing is linked with downstream processes.
Without understanding and even more importantly, cultivating such linkages, a true and complete transformation is impossible.
For instance, most companies will track metrics for spend compliance and cost of processing, whose sub-level metrics tend to interact with each other.
In most cases, trying to optimize one will create an imbalance in the other.
Proper phasing will help your firm to attain ongoing buy-in from organizational stakeholders, thereby potentially achieving playback within a period of 18-24 months.
Due to leadership sponsorship, transformation processes are able to help in driving the message of restructuring.
For instance, when designing an effective procurement organization, it is important to benchmark the ratio between tactical and strategic staff.
Another useful strategy would be to set up regional centers of excellence in geographic "hot spots".
This is especially necessary where close interaction with stakeholders and best practices are vital.
It is important to automate the standardized processes, thereby reducing manpower and effort.
This can introduce certain intriguing options for the creation of more capacity in strategic positions.
The choice of technology should be dictated by deep industry knowledge and technological platforms that have been configured in line with the needs of the business.
However, this is no longer enough.
As companies seek to attain the next level in performance, they must challenge themselves, as well as their service providers to fundamentally transform their procurement functions.
Below is a look at various essential levers for achieving procurement transformation.
- Begin with (and Maintain) an End-To-End Process View
Every aspect of procurement and sourcing is linked with downstream processes.
Without understanding and even more importantly, cultivating such linkages, a true and complete transformation is impossible.
- Data - Metrics Speak Volumes
For instance, most companies will track metrics for spend compliance and cost of processing, whose sub-level metrics tend to interact with each other.
In most cases, trying to optimize one will create an imbalance in the other.
- Phase and Prioritize
Proper phasing will help your firm to attain ongoing buy-in from organizational stakeholders, thereby potentially achieving playback within a period of 18-24 months.
- Bake-In Organizational Effectiveness Analysis to Manage Risk and Sustain Value
Due to leadership sponsorship, transformation processes are able to help in driving the message of restructuring.
For instance, when designing an effective procurement organization, it is important to benchmark the ratio between tactical and strategic staff.
Another useful strategy would be to set up regional centers of excellence in geographic "hot spots".
This is especially necessary where close interaction with stakeholders and best practices are vital.
- Use the Right Technology
It is important to automate the standardized processes, thereby reducing manpower and effort.
This can introduce certain intriguing options for the creation of more capacity in strategic positions.
The choice of technology should be dictated by deep industry knowledge and technological platforms that have been configured in line with the needs of the business.
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