Sciqus Infotech | Self-Service Portals for Smart Workplaces

How Important Is Procurement To Your Company?

How Important Is Procurement To Your Company?

What value does the procuring bring back to the table? I am not referring to the need to purchase goods and services, nor to the compilation of guidelines and standard operating procedures that govern it. I mean you and your teammates. How important would C Level executives say that their procurement team is important to the company?

Every procurement team is different, but they all fall on a continuum with these bookends:

  • They are proactive and influential organizational leaders …
  • … Or reactive tactical followers who add many processes but create little value.

So, where does your procurement team fall? What can you do to develop a much better vision to help your team grow to maturity?


The Maturity Scale

First, let’s add a few points to our scale and define four phases of procurement maturity:

  • Laggards / Transactional – These teams are highly reactive and focus on tactical buying. They exist to establish “checkboxes” and get stakeholders to bypass obstacles for policy reasons. Transaction teams generally have a negative impact on the organization.
  • Traditional / Shared Services: As teams mature, their perspective begins to broaden. Teams in this group look beyond the transaction and begin to assess the market. However, they are often limited to three bid and buy thinking. The focus is on reducing unit costs and controlling the PO processes for just about everything.
  • Enhanced / Vendor Management – Teams will eventually become proactive and value-added functions by engaging in strategic sourcing initiatives and specializing in spend visibility and opportunity assessment.
  • World-class / Supply Management: Procurement teams at the best levels of maturity help shape supplier relationships in such a way that the business moves forward. These teams sit at the decision-making table and help managers shape the direction of the organization.

Where a team land has essentially supported the strength of its vision: the strength to follow a path that is aligned with corporate objectives and to pursue them.

Moving Along the Maturity Scale

How can immature teams of this size become world class? There is no checklist to make sure this can happen (and that kind of thinking is “thinking behind you”). However, there are several questions that Procurement needs to ask and answer along the way:

  • What metrics and reports do we provide to business leaders? In addition to producing reports, we want to make sure we develop information that defines organizational challenges and helps solve them.
  • What tools and technologies are available to us so that we can work efficiently and effectively? We cannot do strategic work when we are lost in tactics.
  • How can we ensure that our process has value? We want to design policies and standard operating procedures that benefit the organization without adding unnecessary bureaucracy to the equation.
  • How can we define our role beyond purchasing tasks? We want to know where and how we can help stakeholders achieve their goals; this often means that we do not help them find the easiest price to sell.

Managing Complexity & Risk with Vision

Leading organizations watch over the long term. They are looking for new ways to change and expand their products and services to keep up with challenging markets. This change often leads to a more efficient and powerful organization. But growth also creates complexity and risk. All teams must learn to deal with this complexity, or risk getting in the way of larger corporate goals. It is no different with procurement.

At Sciqus, we create world-class vendor / supplier portals for organizations. Vendor portals can contribute to business profits to a greater extent. Employ multiple teams that could contribute to the vendor management process. Doing business easily strengthens your brand so your suppliers are loyal. The vendor portal provides a roof to easily perform various vendor-related activities.

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