Time To Build Your Procurement Strategy
The only constant in the business world is change, and we always need to be ready to adapt to it. In the procurement industry, the best way to adapt might be to create a new strategy for your purchases. This could mean small-scale change or a massive workflow overhaul. Regardless of the magnitude of the shift, there are certain steps you should take when deciding how to build a better procurement strategy.
1. Examine the Current Situation
Before you start developing your procurement strategy, take the time to figure out what you have to work with. Look at your current system to see where it aligns with company objectives, budget and production timelines. Consider whether your current strategy is capable of taking on outside challenges and opportunities and if it’s not, identify areas that need improvement.
2. Get Input From Everyone Involved
The worst thing you can do is build a strategy in a vacuum. Talk to everyone who has a stake in a new procurement system to get their thoughts. Those people include agents on the front lines who can provide you with a real-world perspective on what your new strategy needs. Managers and owners will have their own ideas about what needs to be implemented and how the procurement strategy fits with your company’s big picture.
3. Imagine Your Ideal Future
Take into consideration the current state of your procurement strategy and combine it with the input you just received. Then imagine how it might work a year from now. From this process, you’ll gain a better vision of what’s needed to make your procurement strategy successful and efficient in the long-term rather than what might just end up being a short-term fix.
4. Determine Priorities
After you’ve considered the input of all involved parties and come up with a vision for what you want to see moving forward, you now need to determine which organizational issues you need to address first. For example, if your company wants to boost sales, then establish a more robust procurement system to handle the extra inventory purchases.
5. Create Attainable Objectives
While simply boosting sales is a good goal, you need to be a bit more specific when creating a strategy for your business. For example, if the set objective is to increase revenues by 10 per cent by the end of the fourth quarter by boosting the availability of inventory, ask yourself the following questions: is it a specific and measurablegoal? How attainable is it considering where you are now? Is this goal relevant to your larger objectives and is it time-bound (in other words, can it be done in a year)? People dedicated to increasing job performance call this the SMART Plan.
6. Work on Potential Strategies
Now that you’ve assessed your goals, you and your colleagues need to brainstorm the best ways to meet that target. If one colleague believes hiring extra procurement personnel is the answer, you’ll have to weigh the costs of hiring against other solutions because a higher payroll will certainly offset revenues. If another colleague suggests upgrading the company’s procurement software, you’ll have to determine whether it will shave off enough time in the procurement cycle to be worth the investment.
7. Integrate Plans
Before the plan is put into action, map out and walk through the workflow of your new procurement strategy to fine-tune the process and determine whether any bugs remain in the system. At this point, examine how it works in harmony with other department plans and whether any bottlenecks exist now that initiatives are consolidated. Only once this is is confirmed should everyone sign off on the plan.
8. Monitor Results
Once the plan is executed, success isn’t guaranteed. The new process has to be monitored constantly to see how it’s operating and reacting to economic conditions like company growth, consumer demand and sales results. Be ready to revisit your strategy and adapt it to changes in the market and other conditions.
Some companies’ strategies may be more detailed and complicated than others’, but if you’ve followed the above steps, you’ll come up with something that’s a good fit for your operations. Decide now where you want your company to be and devise a way to get there.
Photos: alphaspirit / Shutterstock, ananaline / Shutterstock, bikeriderlondon / Shutterstock