<img height="1" width="1" style="display:none;" alt="" src="https://dc.ads.linkedin.com/collect/?pid=22574&amp;fmt=gif">

HCMWorks Insights

5-Step Guide to a Successful Procurement Strategy

Posted by Julia Fournier on 12 Mar 2019

Procurement is complex and, despite the beliefs of many, is an organization-wide process. A strategic plan is necessary to not only set the overall direction of procurement, but to ensure it is aligned with your company’s corporate strategy.

If you read our recent blog, titled ‘What is Procurement and What Does it Involve?’, you should have a good idea of what exactly procurement looks at and how it differs from purchasing. 

With this in mind, HCMWorks has now created a five-step guide that will help your organization create a strategic procurement strategy that is aligned with your overall business goals.

1 - Conduct an internal analysis of your organization and find room for improvement

Before you start developing your procurement strategy, it’s first important to analyze your current procurement structure and find out if it aligns with the overall company objectives. This will include benchmarking important data such as current performance, resources used, the cost for departments and functions and growth projects.

Once you figure out how/if your procurement process is currently adding value to your overall corporate strategy and how efficient it is, you can then start looking at areas in which you need improvement.

In this step, you will identify the skills gaps and inefficiencies which are preventing your organization from hitting its goals.

2 - Create measurable objectives

Now you know exactly what you need to improve, it’s time to create some well-defined and measurable objectives. By clearly defining your exact goals and objectives, you can then implement performance measures that will allow you to understand if your process is working.

Remember, you should never reach a point where you believe that you can’t improve your goals or that there are no ways that you can change your process. By regularly reviewing your process and the results you get, your organization will be able to consistently find room for improvement.

New tools, technology, and procedures can help make your process more efficient and cost-effective, while new trends could force your organization to reevaluate your existing process.

By ensuring that your organization is constantly looking to improve its procurement process, your business will always be ready for growth.

3 - Develop a plan to meet your objectives

Your initial objectives are set, but how are you going to ensure you reach them? To meet business goals and procurement objectives your next step will be to develop strategic initiatives that help you get there.

This will include creating a framework that identifies the requirement and need of each specific service or product, whether sourcing or outsourcing. A framework will involve identifying needs, finding suppliers, purchase orders, invoicing and payment evaluation of expenditure and much more.

4 - Implement the right technology

It’s all well and good developing a plan, but your procurement team must have the tools for its successful implementation - that’s where technology comes in.

Commercial procurement software solutions will help you enhance your procurement process and ensure it is efficient. These programs will provide you with the data that you’ll need to make accurate business decisions and enhance the areas of your business that need improvement.

A managed services provider (MSP) will be able to help you select the technology that works best for your organization’s specific needs.

5 - Communicate your plan to stakeholders

Once your plan is all set, it’s time to share it with the various stakeholders of your business. It is important that your procurement process is a crucial component of the overall corporate strategy, and this means management teams must buy into your plan.

Communicate with the executive team within your organization to get their thoughts on your procurement strategy. Each manager will be able to advise you on improvements and provide their ideas on how procurement can help the company meet its goals.

Want to learn more about creating a strategic procurement process that fits seamlessly into your organization’s goals? Contact the HCMWorks team of experts today, we are more than willing to help.

10 Ways to Reduce Costs & Risk of Your Contingent Workforce 

Tags: Procurement

Download the White Paper: Order for Chaos