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EspañolStrategic Procurement Management
Most organisations of any size spend more than 50% of their sales income on buying in goods, services or works. Some organisations spend considerably more. Managing this spend well – ensuring that the best value is obtained for every penny spent and treating suppliers as some of your organisation’s best assets – is critical to business success. And effective strategic procurement management within your organisation will ensure that this takes place.Strategic procurement management is a partnership between your users – those who have a need for the spend and own the specification of what is to be bought – and procurement specialists.
It is a discipline based on the successful application of a number of processes, including:
- Gathering of requirements and specification of business needs.
- Sourcing – the choice of supplier(s) to meet those needs.
- Contract management – signing the contract with the chosen supplier(s) and then effectively managing the contracts to completion.
- Procurement to pay (P2P) – raising requisitions, sending out purchase orders and paying your suppliers in a timely manner.
Here are a few tips to ensure to help you achieve excellence in strategic procurement management:
- Create and sustain a separate, well-respected procurement department.
- Make sure your buyers are well trained, particularly in soft skills such as communication. Good people skills are key when dealing with intern users and external suppliers alike.
- Have a strong culture of business alignment and work closely together: users/budget holders, purchasing, finance and legal.
- Make sure you know how much money you’re spending – and what you are spending it on
- Actively manage your suppliers, particularly your strategic suppliers – the ones with whom you spend a lot of money and/or are key for your business’s success.
- Put appropriate systems and tools in place to support procurement activities. For example, the use of electronic auctions can speed up buying, make things fairer and save you money.
- Find ways to measure your procurement performance. If you can’t do this, then how do you know if you’re buying things well?
- Take sustainability seriously – it ensures that what you do now sows the seeds for a successful future.
About the authors: Steve’s knowledge of strategic procurement results from working for over 20 years in procurement in large international companies and is also working for the public sector. He has been instrumental in setting up strategic procurement for various organisations and knows at first hand the challenges it presents. You can find out more about what he does at www.counterpointcourses.com or follow Counterpoint on twitter @counterpoint_co
