Procurement - Procurement Strategy
Do you consider Procurement a strategic element of your business? Ask yourself these questions first before you answer.
- Does your organisation have a Procurement strategy?
- Would you know the meaning of category and commodity segmentation?
- Do you understand the characteristics of expenditure that is core and strategic critical distinct from nuisance and tactical?
- Do you understand that you have different strategic choices for each area of expenditure e.g. non core procurement can be completely outsourced?
- Do you have a commercial structure to the relationship between you and your supplier?
- How integral is your supply base to your business in the areas that matter?
- Do your suppliers share your mission critical objectives?
- How effective are the interfaces and processes between you and your supply base?
- Do you have key indices to measure the effectiveness of the relationship between you and your supplier?
- Do you have key indices that measure the conformance of the good or service that you are procuring?
- Do you really have a clear and unambiguous understanding of what you expect of your supplier; be it O.T.I.F., conformance to specification (do you indeed have clearly understood specifications) or clearly structured quality circles – and importantly do you share this with them?
- Do you constantly monitor the market for new entrants, new technologies or pricing fluctuations?
- Does Procurement have a seat at the boardroom table?
Also ask yourself seriously what your response would be to the Sales Executive that walked in to your office with the order that added £1 million to your turnover and increased your profit before tax by 17%. I am sure it would be close to congratulations, we must discuss your bonus.
Similarly, what would you say to the Procurement team if they delivered the same financial result? Perhaps your response would be along the lines of, “ah that’s what’s expected and it’s about time that supplier got an ultimatum.” Well, what if it came not from the supplier ultimatum but from all the aforementioned strategic initiative.
Do you now consider Procurement a strategic element of your business?