Avoiding Procurement Malpractice – #3 Process Rules

So far in this series on Avoiding Procurement Malpractice, we’ve examined spend visibility and analysis as critical elements of best-in-class procurement practices.

In this final installment, we look at the role of process.

The complexity of today’s trading partner relationships and business volatility combine to increase the pace and pressure on procurement organizations to make the “right” decisions when choosing suppliers. With enterprise-level sourcing policies and processes, backed by deep content and context – the entire sourcing exercise, from opportunity identification to contract execution, can deliver the perfect balance between cost and value for every supplier relationship.

In working with many of the world’s largest companies, with highly complex supply networks and diverse approaches to supplier management, we find some commonalities in the processes that set leaders apart, including:

Holistic, encompassing source-to-spend to drive strategy and execution

• Starts with opportunity identification through spend analysis
• Continues seamlessly through contract execution
• Link processes and technologies, like eSourcing for continuity, visibility and efficiency

Standardized, to level the playing field

• Starts with setting parameters — and stakeholder expectations
o Project timelines, required resources, project evaluation criteria and methodology
• Builds in wiggle room for deviation from the standards
o Category, stakeholders, potential opportunity value and more

Automated, using technology to optimize efficiency and accelerate success

• Spend Analysis solutions
o Generate accurate, timely reports, scalable
• eSourcing applications
o Automate price discovery, bid evaluation analysis and optimization
• Contract Management solutions
o Standardize language, track and measure compliance
• Supplier Performance Management solutions
o Develop supplier surveys and scorecards; collaborate to improve and assess supplier performance and risk

Combining holistic, standardized and automated processes, consistently delivers

• Increased efficiency and less waste
• Continuous improvement through better information and best practice sharing
• Lower costs and higher service

The bottom line is that without spend analysis – and the visibility, analysis and process around understanding what it means, how to act on it, and then ensuring that those actions are taken and effective – procurement executives are moving forward blindly and without their organization’s best interests in mind. The good news is that it doesn’t take a lot to have a big impact on the effectiveness of your sourcing strategy and there’s nothing to be lost by getting started now.

Want to learn more about how to avoid procurement malpractice? Check out the spend analysis white paper from industry expert Andrew Bartolini and BravoSolution here.

Paul Martyn

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