In today’s economic environment,  maintaining status-quo can usually leave you behind and hence is no longer acceptable. Organizations must transform core aspects of their work on a regular basis to stay relevant. How does a procurement function or your supply chain become the best in class? This article aims to bring up key practices that can transform supply chains of most organizations.

Collaborative strategic sourcing is key:

Best in class companies with strong supply chains have a strategic sourcing setup in place. Rather than seeing sourcing as a one-off event, great companies treat suppliers as long-term partners, get internal stakeholder review on suppliers and use any historical supplier information for long-term results. This leads to better management of suppliers, quicker responses from suppliers a streamlined process and also results in a reduction in total cost and responding to customer need in a time-bound manner.

Setup a Procurement Strategy led by a Procurement Council:

Developing an organization-wide procurement strategy aligned with the company’s overall strategy. This should be lead by a Procurement council that should be headed by the procurement head and also comprise business unit managers and other influential company leaders. The role of the procurement council is to facilitate collaboration between the procurement department and the various company stakeholders. The council can also help to remove barriers to success that exist within the organization by providing a forum for cross-functional discussion and communication. The procurement strategy should include category specific strategies for those categories that are needed as per company business plan over the next 1-2 years.

Data is the new oil

Take control of the data that your procurement function generates on a daily basis. Very often, lack of data or poor quality data can be a major hindrance to intelligent sourcing and procurement functions. Great procurement and supply chain leaders are cognizant of the fact that using technology solutions to generate analytics and reports out of existing data can keep them one step ahead of the competition. Examples of data that can be useful for procurement functions are supplier database management, past supplier relationship records, records of pricing sheets of previous bids, intelligent analytical reports from existing contracts etc.

Staff Procurement functions with strategic thinkers and operational leaders

Very often, large companies place procurement and supply chain functions like procurement, logistics, contract management, vendor management, and demand planning and a single supply chain leader. Top leadership needs to have the bandwidth to focus more on strategy and is less concerned about transactional ability. However, this needs to be coupled with leaders who are in place that can take care of transactional aspects of the business too.

Embrace technological solutions that can drive change and can be deployed quickly

Based on your procurement strategy, review the processes that can benefit from technology. Select the technology that best solves your problem. Deploy this solution and have a strong feedback and review mechanism to monitor the output of these solutions. Company management and boards need quick results – ensure that your solutions can be deployed quickly and can provide the results in a time-bound manner. More often, complex solutions that can take 6 months-1 year to deploy can sap employee morale and productivity.

Have a strong Supplier Management platform in place

The best companies form long-term strategic alliances with suppliers by working with them closely during and after the deal is closed. Managing the mundane aspects of supplier history, supplier document management, and performance management can be done very easily with Supplier Relationship management tools. There are 3 main objectives out of such a system

  • Setup a system where vendor history is maintained
  • Vendor performance monitoring is setup through internal review and rating system
  • Establish a central database where vendor data is accessible to all key stakeholders.

Have we missed anything important ? Do write in and let us know – we would love to hear from you.