Creating an Effective Procurement Strategy
When talking with procurement executives about their strategic planning efforts, we hear a wide spectrum of responses regarding how formal (or informal) their procurement strategy is. Some admit to not having a formal strategy, while others have very detailed, well-documented strategies complete with roadmaps, category-specific strategies, and detailed metrics and dashboards. From our experience, procurement organizations that have definitive strategies—with action plans and measurable goals—have much higher success rates than those that do not. Yet, some organizations still operate blindly every year. It’s important to make sure you’re not one of them. At ProcureAbility™, we define procurement strategy as: “A plan for optimizing external spend, procurement operations, and other valuable contributions in a way that supports and is aligned with overall corporate strategy.”
In summary, a procurement strategy is one of the most important tools a procurement organization can use to ensure its success and maximize its value contribution to the company. The strategy should become the compass that guides all efforts for the organization and should be updated at least annually to ensure continual alignment with the corporate strategy, current market conditions, and other external factors.