Is Your Procurement Strategy Bullet Proof?


Is Your Procurement Strategy Bullet Proof?

When budgets are getting pinched, talent management strategies get resigned to the back shelf, and hiring is the first thing to be called to a halt. However, as job growth catches hold again, and businesses scramble to rebound, hiring new employees and talent management becomes a priority.


But even with a need for employee growth in order to keep pace with emerging business demands, obtaining approval for hiring is a challenging hurdle for any department. In the world of Procurement, it’s even more of an obstacle since typically, Procurement and Supply Management functions are lumped in as overhead or “support groups” as opposed to a profit center.


To circumvent a main pain point of the obstacle course (budget), the process for obtaining approval needs to be put in place well in advance of the company’s budget cycle. So what is the first step? A robust justification. You need to ask yourself the right questions, and pose them to the right individuals in a way that invokes no room for rebuttal.


Below is a list of some basic arguments to include:


  • List all anticipated benefits to the company, on short term and long term scales.
  • List how the new position will affect and interact with existing positions.
  • List total cost, including benefits, training time, etc. (even down to business cards).
  • Focus on how the benefits will outweigh the costs, such as how soon the new positions will pay for itself.
  • Always anticipate possible objections, and be ready with an answer.


So let’s skip ahead and assume your proposal went off without a hitch, what is your framework? How are you going to make it all work? The first step to that quandary is metrics – metrics drive behavior. And a pre-step to that: benchmarking. Does your company have the right benchmarking tools in place to ensure your business practices are performing to the industry’s best practices?


Metrics should be developed for each area of your businessto enable you to measure the success and performance of any situation. The metrics will form themain elements of your KPIs – Key Performance Indicators.


This especially applies tothe Procurementrealm’s objectives to improve work flows, programs and key employees who are developing effective and efficient solutions. And certainly for the most important metric in Procurement or Sourcing: savings.


In conclusion, Procurement and Sourcing departments walk a very thin line, and the industry landscape is changing faster than the processes. With the emergence of hot-ticket technology trends on the market currently, such as Big Data & SaaS, the need for quick turnarounds and faster results are becoming the norm. This can prove problematic, as more likely than not, your Procurement and Sourcing teams are lacking in resources. When it comes to those challenges, some of the key recommendations for Sourcing and Procurement executives, according to a recent Gartner study, include:


  • “Recognize that, because more products are getting an IP address, most budgets become IT budgets, and carefully plan for that in terms of preventing their companies from adding risks to their business and operations.”
  • “Create a careful balance between costs saved and value added alongside current approaches where sourcing and procurement organizations execute tactically or facilitate purchasing in their organization.”
  • “Internalize that sourcing and procurement might evolve into a highly strategic contributing role requiring a clear vision and a path to execution that is diligently managed along the thin line between risk and benefit.”


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