Friday 25 March 2016

Challenges in 2016 for Procurement Departments - Part 1

Unlocking the procurement savings—and really making them stick—is a real test for every procurement department, building a road map to the right people, processes and technology is the answer to that challenge.

In actual, procurement team are leaving millions of dollars on the table, and subsequently, it's regularly asked how savings can be measured. As a fact, organizations don't know overspending is going on, not to mention how much. Circuitous spend commonly speaks to 20-30 percent of incomes, but automated procurement process and practices can save 10-30 percent on spend.

The initial step is to develop a strategy for getting indirect spend spend under control. This requires the right blend of individuals, procedures and innovation to oversee, measure and track current spend and to create, and firmly review, cost reduction to ensure it hits the bottom line.

Utilize procurement professionals:

In most companies, attention is paid to direct procurement rather than indirect. What's more, when indirect procurement is addressed, it is mostly done by non-experts, which constrains efficiency, effectiveness and impact. An organization can be led by a visionary CPO with a sound strategy, but if they are not supported by the right group of procurement specialists with deep sourcing knowledge, then vision and right objective can't be executed properly.

A group without this aptitude doesn't necessarily mean it's not talented. Maybe, this ability has been challenged the wrong way, resulting in experience that might not be applicable to strategic sourcing. For instance, a man might have been working responsively, negotiating contract augmentations with occupant suppliers, "putting out fires" as supplier performance issues crop up, and taking into account impromptu spot purchase demands.  Consequently, the CPO does not have the adequate team ability level to elevate the sourcing and acquisition functionality to the next level of development.

Here are a few tips to consider when seeking the right team and how to retain them:
  • Invest in talent development and coaching subject matter experts
  • Implement the right technology and consultants who understand procurement process
  • Budget appropriately and allow for bonuses
  • Create a succession plan
  • Allow partial or full assignments and business line experience
  • Find other means to help grow talent within
  • Look for cultural fits and general procurement knowledge

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