How to build a robust procurement strategy for your business?

Procurement, as a business function, is changing rapidly to live up to the demands of the business. Best-in-class procurement functions are making a conscious shift towards becoming business partners for sustainable value creation. Companies should strive towards building a resilient and robust procurement strategy to achieve growth and create sustainable value for their stakeholders.

What is a Procurement Strategy?
A well-defined procurement strategy involves a long-term roadmap designed to acquire the supplies needed for the business in a cost-effective manner and within agreed timelines. Getting your procurement strategy right is crucial to reducing costs and delivering best-in-class sourcing value to your clients and stakeholders.

Evaluate your current procurement strategy:
The first step towards building an effective procurement strategy starts with an assessment of the current one. Begin by discussing the procurement strategy thread bare and sift through the documentation to find out if the strategy is being followed by the decision makers . Revisit working patterns to make sure that everyone associated with the procurement processes are aligned to the procurement strategy. The strategy documentation should include a clear definition of business goals in addition to the mechanism of measuring key metrics. It should also have roles of stakeholders stated clearly so that the accountability of meeting goals is maintained.

Assess Your Procurement Requirements Objectively:

You should design your procurement strategy based on identifying your procurement needs and priorities. It is essential to understand the view of your procurement team and then stitch it into overall procurement strategy of your business. Focus on the product or service category to understand the areas of importance and optimize your spend accordingly. A holistic view of spend for categories/segments in necessary in carving out an effective procurement strategy for the organization.

Marry your procurement strategy with business goals:

It is vital to align your procurement strategy with your business goals. There should not be any divergence in the thought process and action. Infact, the overall objective of your strategy should be to contribute to achieving business goals and milestones. Frugality is a crucial driver of cost optimization, so your procurement vision should be in tune with the mission and vision of your business else you might not get the desired results.

Any strategy is as good as its execution and procurement is no different. Make sure your back the procurement strategy with a robust execution plan to ensure success and engage with stakeholders regularly to handle challenges, which have the potential to derail the strategy.