Evaluating your procurement function
Every aspect of your business can benefit from being reviewed and evaluated from time to time. Procurement is no different. Yet too often this function is overlooked when it comes time for reviews.
Every aspect of your business can benefit from being reviewed and evaluated from time to time. Procurement is no different. Yet too often this function is overlooked when it comes time for reviews. Often it is a case of “if it ain’t broke, don’t fix it.” While it may seem like Procurement is operating at peak efficiency, there is always room for improvement — even if all you discover is a way to achieve a small cost savings or to find one ineffective process.
Given the rapid pace of change today, processes and tools become outdated quickly. Take something like a standard template that is used for request for proposals (RFPs). Procurement may have been using that same template for a number of years, but it is possible that over time that template is less useful. It might include unnecessary or irrelevant information that is no longer of value. A review will uncover this and allow the Procurement team to tailor the RFP process to better reflect current needs.
As part of transforming Procurement, consider conducting a maturity assessment. This will provide insights you can use to help you select the right technologies and third-party partners you need to achieve your Procurement objectives. The assessment also will give you an opportunity to realign Procurement with the rest of the organization.
Before beginning your assessment, determine what your end goals are. Some goals could be:
- Better aligning Procurement to serve organization-wide strategies;
- Identifying actionable cost saving opportunities;
- Assessing competitiveness against market standards;
- Understanding how well current processes, tools, and workflows serve Procurement’s needs;
- Determining the efficacy of processes for managing risks and enforcing compliance;
- Defining procurement processes that provide the visibility, insight and transparency needed to drive every step of the sourcing and purchasing cycles.
You also need to have a way to measure whether you are achieving the goals you set. If your goal is cost savings, some questions to ask include:
- What constitutes savings?
- How does your organization define “actionable?”
- What other factors are dependent on cost savings?
- Are there goals upon which cost savings are contingent?
Define what the answers should look like for each goal before undertaking your evaluation. Doing so will allow you to be more successful in transforming Procurement into a more valuable part of your organization.