A procurement analyst has summarised four levels of maturity for the procurement function, rising in sophistication from basic to cutting-edge.
Writing in The Strategic Sourceror, procurement consultant, Christopher Ivie, sets out what procurement teams can aim for if they want to evolve from the elementary to the advanced. In ascending order of efficiency, the tiers of procurement maturity are:
This approach to procurement is more reactive than proactive. Procurement teams operating at this level undertake initiatives on an ‘as needed’ basis, an approach that delivers meagre strategic value. It’s limited to short-term projects, and stakeholders are increasingly underwhelmed by it, usually engaging with such teams only because they have no other choice.
These procurement teams are a notch above their tactical siblings. They conduct proactive analyses of the market and base their purchasing decisions, including cost reduction efforts, on the insights their analytics yield. They tend to be more efficient than tactical teams because they organise resources so that they can be shared with other business units. Stakeholders, though, are not especially excited about engaging with them because they tend to adhere to ideas that more advanced procurement teams consider outdated.
Category Management and Supply Relationship Management
These teams are characterised by strong decision-making initiatives and tend to promote beneficial change long after the completion of purchases. They bring advanced expertise and knowledge to help their organisations make optimal decisions, and tend to be seen as trusted advisers throughout the supply chain.
Integrated demand/Supply management
These units are at the peak of the maturity hierarchy and seen as playing a vital role throughout their organisations. They keep a hand on every link in the supply chain using their sophisticated management strategies and advanced analytics. They are also characterised by a process of constant improvement because they have the means to assess market demands and respond swiftly to them – features that earn them a place at the executive table.