To ensure your procurement plan is as effective as possible, you must involve all departments in your organization. Each department requires different procured goods and services, and you should include their requirements while defining your strategic procurement framework. With a representative from each department to identify materials needed, you can fill gaps and inaccuracies in the procurement process and reduce time and resource waste.
Your procurement practices should include cost-saving strategies, risk mitigations, and compliance criteria. The following action items provide a guide to developing a procurement strategy:
The three main steps in developing a strategic procurement plan are defined below to help build your procurement strategy template:
Your procurement strategy framework should include a mission and vision statement for executing a strategic procurement plan. You can evaluate procurement activities using different metrics and tools, such as SWOT analyses, category positioning matrices, and scope analyses. Performing one or more of these analyses will help determine your business's current spending habits and trends and define the company's most significant current and future opportunities.
Tail spend can be tricky to identify and track because it varies for each organization. Tail spend includes the high-volume, low-value purchases that aren't always made with your procurement software and often don't require approval. Some examples of tail spend purchases might include office supplies, business travel, marketing, and temporary staffing. While these purchases are critical to your day-to-day business operations, they're difficult to manage and optimize and can result in over-spending.
Suppose you were to try to list out your tail spend purchases manually. You'd spend time asking managers throughout your organization to detail every purchase on their expense reports. Luckily, procurement strategies keep innovating, making it easier for managers to execute a solid tail spend analysis. Whether you lean on technology or go the old-fashioned route, identifying the types of purchases and the money spent on them will be essential in your strategy.
Define the desired results of your procurement plan (i.e., the goals) and a specific time frame for achieving them.
With metrics and objectives in hand, it's time to define your procurement strategy, including ways to source your materials, preferred suppliers and transporters, and goals for bringing your plan together. Plan a 'perfect world' for your procurement process and tail spend habits, and make it your goal. Identify the necessary steps to make your goal a reality, include timelines, and establish quarterly goals to keep you and your team accountable.
Once your strategic procurement strategy is all together, it's ready to be put to work.