Introduction
In today’s challenging environment, business leaders are consistently looking for ways to enhance profitability and deliver bottom-line savings. In their quest for profitability, procurement can sometimes go under the radar of these leaders. Due to this, they may be missing out on tens of millions of dollars in savings every year that could be realized by establishing a strategic procurement function in the organization.
Historically, companies considered procurement to be a back-office function. These companies have typically believed that procurement’s value is limited to completing transactional tasks such as creating POs and rubberstamping contracts. In fact, in a recent survey of C-Suite executives at financial services companies, we found that this transactional, back-office view of procurement is still prevalent.
Findings from a recent study have highlighted that most C-Suite executives at Financial Services companies are unaware of Procurement’s strategic benefits.
of respondents highlighted they do not consider Procurement’s role to be strategic
of respondents highlighted they do not consider Procurement’s role to be strategic
We have helped companies across different industries reimagine procurement by establishing best-in-class processes and tools. We provide tailored solutions for each client to help them achieve all their business goals. Typically, we start our engagements with a current state assessment as a part of which we evaluate the procurement maturity of the client and leverage our findings to design a future state that enables them to maximize value, reduce risk, and fuel innovation. Our expertise in procurement strategy & operations allows us to deliver strategic solutions that optimize procurement practices specifically tailored for the unique needs of companies across multiple industries.
Ask yourself these 10 to find out how mature procurement organization
- Termination for convenience
- Data Reporting
- Termination Assistance
- Limiting Automatic Price Increases
- Data Ownership
- Insurance / Indemnification clauses
If your answer to most of the 10 questions listed above is no, or you are unsure of the answers, the procurement operations maturity of your organization is likely to be low. This means the role of procurement strategy at your company is highly transactional and you’re leaving a significant amount of money on the table with your third-party suppliers. A procurement transformation program can help evolve your procurement function to a strategic value creator which can not only reduce your third party spend, but also help contain risks.
Our experience of working with companies such as manufacturing, finance, retail etc. for years has demonstrated sustainable benefits that are not limited to bottom line savings.
We understand the unique challenges and requirements of procurement strategy & operations and have successfully helped our clients achieve significant improvements in their procurement practices.
Characteristics of a Sophisticated Procurement Organization
People
Experienced and skilled procurement strategy team with strong negotiation and sourcing skillsets
Tools
Best-in-class RFP templates, negotiation toolkits, contract terms & conditions
Strategic Involvement
Systematically involved in all purchase decisions in early stages to enable strategic decision making
Process
Standardized procurement strategy processes for all spend categories with cross functional involvement from Business, Procurement, Legal, IT
Procurement Maturity Drives Sustainable Strategic Value
Low Maturity
Limited efforts to reduce spend with 3rd party vendors
Lack of pricing benchmarks to guide vendor negotiations
Existing partner relationships play a major role in awarding new projects
Strategic plans are finalized without procurement input
High Maturity
Specific, planned initiatives to reduce costs with 3rd party suppliers
Negotiations scripts and templates, with benchmarks to guide negotiation efforts
New projects are bid out to the market, and awarded to industry-leading vendors
Procurement objectives are aligned with a company’s corporate strategy
By establishing a best-in-class procurement strategy, companies can realize a multitude of operational benefits. This includes mitigating third-party risks systematically, as well as creating collaborative relationships with third-parties that foster innovation. These measures, in turn, lead to a positive impact on the top line and more satisfied end-customers.
